Question

Journal entry for placing an order for HP printers for rs. 15000 , amount advance rs. 5000

Answer 1

Given"Journal entry For placing an order for HP printers for 15000 , amount paid in advance 5000"

The current transaction affects two accounts...

HP printers advance a/c , Cash a/c..where both of them are Real Accounts(all assets and liabilities come under it.. Payment made in advance is definitely an asset to us..and cash as the name suggests)

The Three golden rules of accounting are

Personal account - Debit the receiver ,credit the giver

Real Account- Debit what comes in , credit what goes out.

Nominal account- Debit all expenses and losses , credit all incomes and gains..

So as per the second rule above...As an asset (HP Printers advance a/c ) is incoming ,it should be debited and since cash(another asset) is outgoing it should be credited.

So the Journal Entry will be:-

At the time of payment in advance-

HP printers advance a/c Dr 5000

To cash a/c 5000

(Being amount paid for Printers in advance)

These are the follow up journal entries.(I'm adding these for the purpose better understanding)

At the time of purchase-

HP Printers a/c Dr 15000

To Supplier a/c 15000

(Being Printers purchased)

At the time of payment-

Supplier a/c Dr 15000

To Cash a/c. Dr 10000

To HP printers advance a/c 5000

(Being Payment made against HP printers purchased))