Journal Entry for Cash paid to creditors in full settlement of Rs. 2,050

Description:
When a company makes a payment to its creditors in full settlement of a debt, it needs to record this transaction in its accounting records through a journal entry. In this case, we will be recording a journal entry for cash paid to creditors in full settlement of Rs. 2,050.

Journal Entry:
- Debit: Creditors Account (Rs. 2,050)
- Credit: Cash Account (Rs. 2,050)

Explanation:
- Debit to Creditors Account (Rs. 2,050): This entry represents the amount paid to the creditors, which reduces the company's liability towards them. The debit entry increases the expense or reduces the liability.
- Credit to Cash Account (Rs. 2,050): This entry represents the outflow of cash from the company to settle the debt with the creditors. The credit entry decreases the asset (cash) as the company is paying out the cash.

Impact on Financial Statements:
- Income Statement: The payment to creditors will not directly impact the income statement as it is a balance sheet transaction.
- Balance Sheet: The balance sheet will reflect a decrease in the creditor's account and a decrease in the cash account, showing that the company has settled its debt with the creditors.

Conclusion:
Recording journal entries accurately is crucial for maintaining proper accounting records and ensuring the financial health of the company. In this case, the journal entry for cash paid to creditors in full settlement of Rs. 2,050 helps in accurately reflecting the company's financial position and obligations.