Purchases A/C Dr                    50000

   To Cash A/C                              20000

   To Creditors A/c                        30000

( Being goods purchased)

Journal Entry for Purchase of Goods for Cash and Credit

When a business purchases goods, it may do so by paying cash or on credit. Both transactions require journal entries to be recorded in the accounting books of the business. In this scenario, the business purchases goods for Rs. 50,000, out of which Rs. 20,000 is paid in cash, and Rs. 30,000 is on credit. Here's how to record the journal entry:

Cash Purchase of Goods

When goods are purchased for cash, the journal entry is as follows:

Date Account Title Debit Credit
Today Purchases 20,000
Today Cash 20,000

In this case, Purchases is debited with Rs. 20,000, and Cash is credited with the same amount. The Purchases account is a temporary account that records the cost of goods bought, which will be transferred to the Cost of Goods Sold account at the end of the accounting period.

Credit Purchase of Goods

When goods are purchased on credit, the journal entry is as follows:

Date Account Title Debit Credit
Today Purchases 30,000
Today Accounts Payable 30,000

In this case, Purchases is debited with Rs. 30,000, and Accounts Payable is credited with the same amount. The Accounts Payable account is a liability account that records the amount owed to suppliers for goods bought on credit.

Total Purchase of Goods

To record the total purchase of goods, the journal entry is as follows:

Date Account Title Debit Credit
Today Purchases 50,000
Today Cash 20,000
Today Accounts Payable 30,000

In this case, Purchases is debited with Rs. 50,000, Cash is credited with Rs. 20,000, and Accounts Payable is credited with Rs. 30,000. The total cost of goods purchased is debited to the Purchases account, while the amounts paid in cash and on credit are credited to the Cash and Accounts Payable accounts, respectively.

Conclusion

Recording journal entries is an essential part of the accounting process, as it helps businesses keep track of their transactions and financial position. When purchasing goods, it's important to record the journal entries accurately to ensure that the information is reflected correctly in the financial statements.