Journal Entry for Purchase Goods for Cash

Purchase Goods for Cash

In this transaction goods “comes in” on purchasing of goods and therefore purchase A/c is debited on purchase of goods and cash goes out therefore cash A/c credited the entry is as follows.

Date	Particulars	LF	Debit Amount	Credit Amount
xx	Purchase A/c Dr.  To Cash A/c   [Being the goods were acquired, and the payment was made in cash]		Amount	Amount

Explanation:

1. Purchase Account (Debit):

• The purchase account is debited to record the increase in the cost of goods acquired. This is in line with the fundamental accounting principle of debiting expenses and losses.

3. To Cash Account (Credit):

   • The cash account is credited as payment is made in cash. This aligns with the principle of crediting assets when they decrease. In this case, cash is an asset that decreases because it is used to purchase goods.

4. Narration:

• The narration serves as a brief explanation of the transaction. In this instance, it specifies that the goods were acquired, and the payment was made in cash.

To see a practical example, check out this journal entry for the purchase of goods for Rs.30,000."

Conclusion: This journal entry reflects a normal business transaction where goods are purchased, and payment is made immediately in cash. It reflects the dual aspect of accounting, ensuring that the accounting equation remains balanced. The purchases account reflects the increase in expenses, and the cash account reflects the decrease in assets.