Question

purchase goods from Sachin for cash for Rupees 200000 and paid sell Central Sale Tax 8% payment is made by cheque please give me the journal entry

Answer 1

This is a tricky question..One should be careful while recording 'inter state purchase' (since CST is tax on interstate Transactions)

Given .. Purchased Goods from sachin for cash rs 200000 and CST 8%...

When we Purchase Goods ..the taxes will form part of the Purchase price itself..tax will not be recorded separately...

So
Purchase price = 200000 +8% CST = 216000

Current Transaction affects 3 accounts. cash ,bank and Purchases..
.
where Purchases is a nominal account ,cash and bank are Real accounts...

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

Since cash and bank being real accounts..and are going out/decreasing ..we should credit them.. amount exclusively covered by GST is paid through Cheque..so bank a/c is credited..and for remaining amount which is made on cash..cash a/c should be credited

Since Purchases is nominal account..and being an expense should be debited...

So the Journal Entry will be

Purchases a/c. Dr. 216000

To cash a/c. 200000

To Bank a/c 16000

(being Purchases made out of cash and cheque)