Journal Entry for Buying Goods from Matthew

To record the purchase of goods from Matthew, a journal entry needs to be made in the books of accounts. A journal entry is a chronological recording of financial transactions in a company's accounting system. Let's break down the journal entry into its key components:

Date: The date on which the goods were purchased from Matthew.

Debit: The accounts that need to be debited.

Credit: The accounts that need to be credited.

Explanation: A brief description of the transaction.

Example Journal Entry:

Date: [Date]

Debit: [Purchased Goods Account]

Credit: [Accounts Payable - Matthew]

Explanation: Purchased goods from Matthew on credit.

Now, let's delve into each component in more detail:

Date: The date on which the purchase transaction occurred. It is important to record the correct date to maintain accurate financial records.

Debit: The account that needs to be debited in the journal entry is the "Purchased Goods Account" or a similar account. This account represents the cost of goods acquired for resale or use in the business. It is a nominal account and will increase with a debit entry.

Credit: The account that needs to be credited in the journal entry is the "Accounts Payable - Matthew" or a similar account. This account represents the liability created by purchasing goods on credit from Matthew. It is a personal account and will increase with a credit entry.

Explanation: In this section, a brief description of the transaction should be provided. It should mention that goods were purchased from Matthew on credit. Providing a clear explanation helps in understanding the transaction in the future.

Overall, the journal entry for buying goods from Matthew involves debiting the Purchased Goods Account and crediting the Accounts Payable - Matthew or a similar account. This entry accurately reflects the increase in the cost of goods and the liability created by purchasing goods on credit.

Purchase a/c Dr. To Mathew a/c. cr.