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Journalise the following: purchased machinery for 20000 and paid 200 as it's cartage?
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Journalise the following: purchased machinery for 20000 and paid 200 a...
Purchase of Machinery for 20000 with 200 Paid as Cartage
Journal Entry
When a business purchases machinery, it is considered a capital expenditure as it will benefit the business for more than one accounting period. In this case, the business has also paid 200 for the cartage of the machinery, which is an expense incurred to transport the machinery to the business premises. The journal entry for this transaction would be:
- Debit Machinery Account - 20000
- Credit Cash/Bank Account - 20000
- Debit Cartage Account - 200
- Credit Cash/Bank Account - 200
Explanation of the Journal Entry
The above journal entry can be explained as follows:
- The debit entry to the Machinery Account represents the purchase of the machinery for 20000. This account is a non-current asset account and will be recorded on the balance sheet as an asset.
- The credit entry to the Cash/Bank Account represents the payment made for the machinery. This account is a current asset account and will also be recorded on the balance sheet as an asset.
- The debit entry to the Cartage Account represents the expense incurred for the transportation of the machinery to the business premises. This account is an expense account and will be recorded on the income statement as an expense.
- The credit entry to the Cash/Bank Account represents the payment made for the cartage expense. This account is a current asset account and will also be recorded on the balance sheet as an asset.
Conclusion
It is important for businesses to record all transactions accurately in their accounting records. The above journal entry shows the correct way of recording the purchase of machinery and related cartage expense. This will help the business to keep track of its assets and expenses and provide a clear picture of its financial position.
Community Answer
Journalise the following: purchased machinery for 20000 and paid 200 a...
Machinery A/C dr.20000cartage A/C dr. 200To cash A/C. 20200 ..sorry...no proper presentation just follow entry...and not follow ..pattern
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Journalise the following: purchased machinery for 20000 and paid 200 as it's cartage?
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Journalise the following: purchased machinery for 20000 and paid 200 as it's cartage? for Class 11 2024 is part of Class 11 preparation. The Question and answers have been prepared according to the Class 11 exam syllabus. Information about Journalise the following: purchased machinery for 20000 and paid 200 as it's cartage? covers all topics & solutions for Class 11 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Journalise the following: purchased machinery for 20000 and paid 200 as it's cartage?.
Journalise the following: purchased machinery for 20000 and paid 200 as it's cartage? for Class 11 2024 is part of Class 11 preparation. The Question and answers have been prepared according to the Class 11 exam syllabus. Information about Journalise the following: purchased machinery for 20000 and paid 200 as it's cartage? covers all topics & solutions for Class 11 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Journalise the following: purchased machinery for 20000 and paid 200 as it's cartage?.
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