Question

purchased 10 computers @ Rs.15000 for resale.out of these 10 computers, one computer was put to office use..plz pass the journal entry for this question.

Answer 1

First of all we should know the difference between assets and goods

Goods are those held in the business for the purpose of resale

Assets are those held in the business for long time for its personal use..

So in the question computers which are Purchased with a view to resale are considered as goods...and That which is put to office use is considered as asset...

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 the Journal entries will be -


since 9 computers are bought with an intention to sell them..they will be considered as goods... Purchase of goods will be recorded as purchases...as Per the third golden rule of accounting... Purchases being a nominal account and it is an expense ..so should be debited to that extent....and Basing on second golden rule of accounting,,What goes out should be credited...cash which is a real account and for Purchases cash is paid ..so it is to be debited...

Purchases a/c Dr 135000
(9 × 15000)

To cash. a/c. 135000

(Being computers purchased for cash)


Since one computer is held for office use..it will become an Asset and hence it is a real account .. Basing on second golden rule of accounting..What comes in should be debited so computer should be debited.and ..What goes out should be credited...cash which is a real account and for Purchases cash is paid ..so it is to be debited


Computer a/c. Dr. 15000
(1 × 15000)

To cash a/c 15000

(Being computer purchased for cash)