*Journalising* Enter the following Transactions in the Journal of Mudit: | 2017 | | ₹ | |---|---|---| | Jan.01 | Commenced business with cash | 1,75,000 | | Jan.01 | Building | 1,00,000 | | Jan.02 | Goods purchased for cash | 75,000 | | Jan.03 | Sold goods to Ramesh | 30,000 | | Jan.04 | Paid wages | 500 | | Jan.06 | Sold goods for cash | 10,000 | | Jan.10 | Paid for trade expenses | 700 | | Jan.12 | Cash received from Ramesh | 29,500 | | | Discount allowed | 500 | | Jan.14 | Goods purchased for Sudhir | 27,000 | | Jan.18 | Cartage paid | 1,000 | | Jan.20 | Drew cash for personal use | 5,000 | | Jan.22 | Goods use for house hold | 2,000 | | Jan.25 | Cash paid to Sudhir | 26,700 | | | Discount allowed | 300 |

> [!TLDR] > Mudit's transactions are journalised below. Opening capital = Cash ₹1,75,000 + Building ₹1,00,000 = ₹2,75,000; goods withdrawn for home are drawings; the creditor Sudhir is settled with a ₹300 discount received. **Treatment.** Assets (Cash, Building) brought in are debited and Capital credited. Cash/credit purchases → Purchases Dr. Credit sale to Ramesh → Ramesh Dr., Sales Cr., and on collection the ₹500 discount allowed is a loss (Dr.). Goods taken for household use are **Drawings** (credit Purchases at cost). Paying Sudhir ₹26,700 against ₹27,000 gives **Discount Received ₹300** (a gain, credited). **Journal of Mudit** | Date (2017) | Particulars | L.F. | Debit (₹) | Credit (₹) | |---|---|---|---|---| | Jan 01 | Cash A/c **Dr.** | | 1,75,000 | | | | Building A/c **Dr.** | | 1,00,000 | | | | To Capital A/c | | | 2,75,000 | | | (Business commenced with cash and building) | | | | | Jan 02 | Purchases A/c **Dr.** | | 75,000 | | | | To Cash A/c | | | 75,000 | | | (Goods purchased for cash) | | | | | Jan 03 | Ramesh A/c **Dr.** | | 30,000 | | | | To Sales A/c | | | 30,000 | | | (Goods sold to Ramesh on credit) | | | | | Jan 04 | Wages A/c **Dr.** | | 500 | | | | To Cash A/c | | | 500 | | | (Wages paid) | | | | | Jan 06 | Cash A/c **Dr.** | | 10,000 | | | | To Sales A/c | | | 10,000 | | | (Goods sold for cash) | | | | | Jan 10 | Trade Expenses A/c **Dr.** | | 700 | | | | To Cash A/c | | | 700 | | | (Trade expenses paid) | | | | | Jan 12 | Cash A/c **Dr.** | | 29,500 | | | | Discount Allowed A/c **Dr.** | | 500 | | | | To Ramesh A/c | | | 30,000 | | | (Cash received from Ramesh, discount allowed) | | | | | Jan 14 | Purchases A/c **Dr.** | | 27,000 | | | | To Sudhir A/c | | | 27,000 | | | (Goods purchased from Sudhir on credit) | | | | | Jan 18 | Cartage A/c **Dr.** | | 1,000 | | | | To Cash A/c | | | 1,000 | | | (Cartage paid) | | | | | Jan 20 | Drawi

*Journalising* Enter the following Transactions in – Class 11 Accountancy

Numerical Questions · Q12

Journalising

Enter the following Transactions in the Journal of Mudit:

2017		₹
Jan.01	Commenced business with cash	1,75,000
Jan.01	Building	1,00,000
Jan.02	Goods purchased for cash	75,000
Jan.03	Sold goods to Ramesh	30,000
Jan.04	Paid wages	500
Jan.06	Sold goods for cash	10,000
Jan.10	Paid for trade expenses	700
Jan.12	Cash received from Ramesh	29,500
	Discount allowed	500
Jan.14	Goods purchased for Sudhir	27,000
Jan.18	Cartage paid	1,000
Jan.20	Drew cash for personal use	5,000
Jan.22	Goods use for house hold	2,000
Jan.25	Cash paid to Sudhir	26,700
	Discount allowed	300

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Concept understanding — Purchase Journal Entry

Purchase Journal Entry – A First Look

Think of a shopkeeper who buys goods to sell. Every time they bring stock into the shop, something changes: the shop now has more goods, but it also owes money (or has paid cash). The purchase journal entry is simply the accountant’s way of recording that moment — the moment goods come in.

The Everyday Intuition

You walk into a stationery shop and buy 50 notebooks for ₹2,000. From the shop’s point of view, two things happen at once:

The shop gains notebooks (an asset).
The shop loses cash (another asset) or owes the supplier (a liability).

The purchase entry captures both sides of that single transaction. It is not about the sale to a customer — that comes later. This is the inward movement of goods meant for resale.

The Precise Meaning

In Accountancy, a Purchase Journal Entry records the credit purchase of goods (stock-in-trade) for resale in the normal course of business. If the purchase is for cash, it goes into the Cash Book, not the Purchase Journal. The Purchase Journal (also called the Purchase Book) is specifically for credit purchases of goods.

Important

Only goods bought for resale are recorded here. Buying a computer for office use, or buying raw materials for manufacturing, is not a “purchase” in this sense — those are asset purchases and go elsewhere.

Why It Matters

Without this entry, the business would not know:

How much stock it holds.
How much it owes to each supplier.
The true cost of goods sold when calculating profit.

The Purchase Journal is the first step in the trading account. If you get this entry wrong, the entire profit figure goes wrong.

Accounting Treatment – The Golden Rule

For a credit purchase of goods, the rule is:

Debit Purchases Account (increase in expenses/goods)

Credit Supplier’s Personal Account (increase in liability)

The logic: Purchases is a nominal account (expense), so an increase is debited. The supplier is a personal account — when we owe them, we credit.

Example

On 5th April, bought goods from Ramesh for ₹10,000 on credit.

Journal Entry:

Date	Particulars	Debit (₹)	Credit (₹)
2024 Apr 5	Purchases A/c Dr.	10,000
	To Ramesh A/c		10,000
	(Being goods bought on credit from Ramesh)

Note

The narration “Being goods bought on credit from Ramesh” is mandatory in the journal. It explains the transaction in plain words.

If It Were a Cash Purchase

If the same goods were bought for cash, the entry would be:

Date	Particulars	Debit (₹)	Credit (₹)
2024 Apr 5	Purchases A/c Dr.	10,000
	To Cash A/c		10,000
	(Being goods bought for cash)

Notice: the credit side changes from a personal account (Ramesh) to a real account (Cash). The debit remains the same because the nature of the transaction — gaining goods — is unchanged.

The Purchase Book Format (Proforma)

The Purchase Journal itself (the book of original entry) has a standard format. Each credit purchase is recorded here before being posted to the ledger.

Purchase Book (Journal) Format: …

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Journal of Mudit (Jan 2017)

Date	Particulars	Debit (₹)	Credit (₹)
Jan 01	Cash A/c Dr. / Building A/c Dr.	1,75,000 / 1,00,000
	To Capital A/c		2,75,000
Jan 02	Purchases A/c Dr.	75,000
	To Cash A/c		75,000
Jan 03	Ramesh A/c Dr.	30,000
	To Sales A/c		30,000
Jan 04	Wages A/c Dr.	500
	To Cash A/c		500
Jan 06	Cash A/c Dr.	10,000
	To Sales A/c		10,000
Jan 10	Trade Expenses A/c Dr.	700
	To Cash A/c		700
Jan 12	Cash A/c Dr. / Discount Allowed A/c Dr.	29,500 / 500
	To Ramesh A/c		30,000
Jan 14	Purchases A/c Dr.	27,000
	To Sudhir A/c		27,000
Jan 18	Cartage A/c Dr.	1,000
	To Cash A/c		1,000
Jan 20	Drawings A/c Dr.	5,000
	To Cash A/c		5,000

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Mudit's transactions are journalised below. Opening capital = Cash ₹1,75,000 + Building ₹1,00,000 = ₹2,75,000; goods withdrawn for home are drawings; the creditor Sudhir is settled with a ₹300 discount received.

Treatment. Assets (Cash, Building) brought in are debited and Capital credited. Cash/credit purchases → Purchases Dr. Credit sale to Ramesh → Ramesh Dr., Sales Cr., and on collection the ₹500 discount allowed is a loss (Dr.). Goods taken for household use are Drawings (credit Purchases at cost). Paying Sudhir ₹26,700 against ₹27,000 gives Discount Received ₹300 (a gain, credited).

Journal of Mudit

Date (2017)	Particulars	Debit (₹)	Credit (₹)
Jan 01	Cash A/c Dr.	1,75,000
	Building A/c Dr.	1,00,000
	To Capital A/c		2,75,000
	(Business commenced with cash and building)
Jan 02	Purchases A/c Dr.	75,000
	To Cash A/c		75,000
	(Goods purchased for cash)
Jan 03	Ramesh A/c Dr.	30,000
	To Sales A/c		30,000
	(Goods sold to Ramesh on credit)
Jan 04	Wages A/c Dr.	500
	To Cash A/c		500
	(Wages paid)
Jan 06	Cash A/c Dr.	10,000
	To Sales A/c		10,000
	(Goods sold for cash)
Jan 10	Trade Expenses A/c Dr.	700
	To Cash A/c		700
	(Trade expenses paid)
Jan 12	Cash A/c Dr.	29,500
	Discount Allowed A/c Dr.	500
	To Ramesh A/c		30,000
	(Cash received from Ramesh, discount allowed)
Jan 14	Purchases A/c Dr.	27,000
	To Sudhir A/c		27,000
	(Goods purchased from Sudhir on credit)
Jan 18	Cartage A/c Dr.	1,000
	To Cash A/c		1,000
	(Cartage paid)
Jan 20	Drawings A/c Dr.	5,000
	To Cash A/c		5,000
	(Cash drawn for personal use)

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