Journal Entry for Purchase of Goods
When purchasing goods worth 350,000 from Jharkhand, it is essential to record the transaction accurately in the journal. The journal entry reflects the increase in assets (inventory or purchases) and the increase in liabilities (accounts payable, if not paid immediately).
Transaction Details
- Date: [Insert Date]
- Transaction: Purchase of goods from Jharkhand
- Amount: 350,000
- Payment Terms: [Cash/Credit]
Journal Entry
The journal entry for this transaction will be as follows:

• Debit: Purchases Account (Goods Purchased) 350,000
• Credit: Accounts Payable (Liability) 350,000

Explanation of the Entry
- Purchases Account:
- This account is debited because purchasing goods increases the inventory, which is considered an asset.
- Accounts Payable:
- This account is credited to reflect the obligation to pay for the goods acquired. This is a liability that shows the amount owed to the supplier.
Importance of Accurate Recording
- Financial Clarity: Accurate journal entries ensure that financial statements reflect true business conditions.
- Audit Trail: A well-maintained journal provides an audit trail for future reference.
- Inventory Management: Tracking purchases helps in managing stock levels effectively.
By following these guidelines, businesses can maintain accurate financial records and ensure compliance with accounting principles.