Purchase machinery costing 230000 by paying 30000 cash immediately
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Given"Purchase machinery costing 230000 by paying 30000 cash immediately"
This transaction affects 3 accounts... Machinery a/c (we are purchasing it) , cash a/c(We are paying) , Creditor a/c(because only 30000 is paid instantly,remaining is on credit)
Where Machinery and Cash are Real Accounts(all the assets and liabilities come under it)..Creditor is a personal a/c..
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..
As per the above rules ,Machinery is coming in so should be debited whereas cash is going out and Creditor is giver so should be credited to that extent....
The Journal Entry will be
Machinery a/c Dr 230000
To Cash a/c
To creditor a/c
(Being machinery Purchased)
This transaction affects 3 accounts... Machinery a/c (we are purchasing it) , cash a/c(We are paying) , Creditor a/c(because only 30000 is paid instantly,remaining is on credit)
Where Machinery and Cash are Real Accounts(all the assets and liabilities come under it)..Creditor is a personal a/c..
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..
As per the above rules ,Machinery is coming in so should be debited whereas cash is going out and Creditor is giver so should be credited to that extent....
The Journal Entry will be
Machinery a/c Dr 230000
To Cash a/c
To creditor a/c
(Being machinery Purchased)
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