Question

Purchased machinery ₹85000 and issued a cheque for the same. (Journal entry) ​

Answer 1

Answer:

What will be the journal entry for a purchased machinery from Vikram & Co.?

a) If the purchased is on cash basis:

DR Machinery

CR Cash on Hand/in Bank

To record machinery paid on cash;

b) If the purchased is on account basis:

DR Machinery

CR Accounts Payable-Vikram & Co.

To record machinery on account.

You’d debit Machinery or Equipment, whatever you happen to call that account. But depending upon how you’re paying for it, the credit side could go multiple ways,

If you paid cash for the whole thing, then you’d credit Cash (Bank with accounting software)

If you’re buying now and will pay for it later on, then you’d credit Accounts Payable

If you’re paying part cash and paying the rest later, then you’d credit Cash (Bank) for the cash payment and Accounts Payable for the remainder.