Question

Purchased furniture placed an order for hp printers for rs15000amount advanceprchased computer through cheque journal entry

Answer 1

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 ××××

To cash a/c ××××

(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 xxxxx

To Supplier a/c xxxxx

(Being Printers purchased)

At the time of payment- Part payment

Supplier a/c Dr xxxx

To Cash a/c. Dr xxxx

To HP printers advance a/c xxxx

(Being Payment made against HP printers purchased)


Computer account Dr xxxx

To Bank account xxxx

(Being computer bought by Cheque)

computer and bank are Assets


Furniture account Dr××××

To cash account ××××

(Being Furniture bought)

furniture and cash are Assets