*Posting* Give journal entries of M/s Mohit traders, Post them to the Ledger from the following transactions:

> [!TLDR] > Mohit Traders' transactions are journalised and posted. Goods returned to Hema reduce the payable; **Cash A/c closes at ₹2,900 (Dr)** and **Bank A/c at ₹50,000 (Dr)**; Hema Traders is fully settled. **Journal of M/s Mohit Traders** | Date (2017) | Particulars | L.F. | Debit (₹) | Credit (₹) | |---|---|---|---|---| | Aug 01 | Cash A/c **Dr.** | | 1,10,000 | | | | To Capital A/c | | | 1,10,000 | | | (Business commenced with cash) | | | | | Aug 02 | Bank A/c **Dr.** | | 50,000 | | | | To Cash A/c | | | 50,000 | | | (Bank account opened with HDFC) | | | | | Aug 03 | Furniture A/c **Dr.** | | 20,000 | | | | To Cash A/c | | | 20,000 | | | (Furniture purchased) | | | | | Aug 07 | Purchases A/c **Dr.** | | 30,000 | | | | To Cash A/c | | | 30,000 | | | (Goods bought for cash from M/s Rupa Traders) | | | | | Aug 08 | Purchases A/c **Dr.** | | 42,000 | | | | To Hema Traders A/c | | | 42,000 | | | (Goods purchased from M/s Hema Traders on credit) | | | | | Aug 10 | Cash A/c **Dr.** | | 30,000 | | | | To Sales A/c | | | 30,000 | | | (Goods sold for cash) | | | | | Aug 14 | Gupta Traders A/c **Dr.** | | 12,000 | | | | To Sales A/c | | | 12,000 | | | (Goods sold to M/s Gupta Traders on credit) | | | | | Aug 16 | Rent A/c **Dr.** | | 4,000 | | | | To Cash A/c | | | 4,000 | | | (Rent paid) | | | | | Aug 18 | Trade Expenses A/c **Dr.** | | 1,000 | | | | To Cash A/c | | | 1,000 | | | (Trade expenses paid) | | | | | Aug 20 | Cash A/c **Dr.** | | 12,000 | | | | To Gupta Traders A/c | | | 12,000 | | | (Cash received from Gupta Traders) | | | | | Aug 22 | Hema Traders A/c **Dr.** | | 2,000 | | | | To Purchase Returns A/c | | | 2,000 | | | (Goods returned to Hema Traders) | | | | | Aug 23 | Hema Traders A/c **Dr.** | | 40,000 | | | | To Cash A/c | | | 40,000 | | | (Cash paid to Hema Traders in settlement) | | | | | Aug 25 | Postage A/

Numerical Questions · Q18

Posting

Give journal entries of M/s Mohit traders, Post them to the Ledger from the following transactions:

August 2017		₹
1.	Commenced business with cash	1,10,000
2.	Opened bank account with H.D.F.C.	50,000
3.	Purchased furniture	20,000
7.	Bought goods for cash from M/s Rupa Traders	30,000
8.	Purchased good from M/s Hema Traders	42,000
10.	Sold goods for cash	30,000
14.	Sold goods on credit to M/s. Gupta Traders	12,000
16.	Rent paid	4,000
18.	Paid trade expenses	1,000
20.	Received cash from Gupta Traders	12,000
22.	Goods return to Hema Traders	2,000
23.	Cash paid to Hema Traders	40,000
25.	Bought postage stamps	100
30.	Paid salary to Rishabh	4,000

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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 M/s Mohit Traders (Aug 2017) — main entries:

Date	Particulars	Debit (₹)	Credit (₹)
Aug 01	Cash A/c Dr. — To Capital A/c	1,10,000	1,10,000
Aug 02	Bank A/c Dr. — To Cash A/c	50,000	50,000
Aug 03	Furniture A/c Dr. — To Cash A/c	20,000	20,000
Aug 07	Purchases A/c Dr. — To Cash A/c	30,000	30,000
Aug 08	Purchases A/c Dr. — To Hema Traders A/c	42,000	42,000
Aug 10	Cash A/c Dr. — To Sales A/c	30,000	30,000
Aug 14	Gupta Traders A/c Dr. — To Sales A/c	12,000	12,000
Aug 16	Rent A/c Dr. — To Cash A/c	4,000	4,000
Aug 18	Trade Expenses A/c Dr. — To Cash A/c	1,000	1,000
Aug 20	Cash A/c Dr. — To Gupta Traders A/c	12,000	12,000
Aug 22	Hema Traders A/c Dr. — To Purchase Returns A/c	2,000	2,000
Aug 23	Hema Traders A/c Dr. — To Cash A/c	40,000	40,000

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Mohit Traders' transactions are journalised and posted. Goods returned to Hema reduce the payable; Cash A/c closes at ₹2,900 (Dr) and Bank A/c at ₹50,000 (Dr); Hema Traders is fully settled.

Journal of M/s Mohit Traders

Date (2017)	Particulars	Debit (₹)	Credit (₹)
Aug 01	Cash A/c Dr.	1,10,000
	To Capital A/c		1,10,000
	(Business commenced with cash)
Aug 02	Bank A/c Dr.	50,000
	To Cash A/c		50,000
	(Bank account opened with HDFC)
Aug 03	Furniture A/c Dr.	20,000
	To Cash A/c		20,000
	(Furniture purchased)
Aug 07	Purchases A/c Dr.	30,000
	To Cash A/c		30,000
	(Goods bought for cash from M/s Rupa Traders)
Aug 08	Purchases A/c Dr.	42,000
	To Hema Traders A/c		42,000
	(Goods purchased from M/s Hema Traders on credit)
Aug 10	Cash A/c Dr.	30,000
	To Sales A/c		30,000
	(Goods sold for cash)
Aug 14	Gupta Traders A/c Dr.	12,000
	To Sales A/c		12,000
	(Goods sold to M/s Gupta Traders on credit)
Aug 16	Rent A/c Dr.	4,000
	To Cash A/c		4,000
	(Rent paid)
Aug 18	Trade Expenses A/c Dr.	1,000
	To Cash A/c		1,000
	(Trade expenses paid)
Aug 20	Cash A/c Dr.	12,000
	To Gupta Traders A/c		12,000
	(Cash received from Gupta Traders)
Aug 22	Hema Traders A/c Dr.	2,000
	To Purchase Returns A/c		2,000
	(Goods returned to Hema Traders)
Aug 23	Hema Traders A/c Dr.	40,000
	To Cash A/c		40,000
	(Cash paid to Hema Traders in settlement)
Aug 25	Postage A/c Dr.	100
	To Cash A/c		100
	(Postage stamps bought)
Aug 30	Salary A/c Dr.	4,000
	To Cash A/c		4,000
	(Salary paid to Rishabh)

Ledger (principal accounts)

Cash Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Capital	1,10,000	By Bank	50,000
To Sales	30,000	By Furniture	20,000
To Gupta Traders	12,000	By Purchases	30,000
		By Rent	4,000
		By Trade Expenses	1,000
		By Hema Traders	40,000
		By Postage	100
		By Salary	4,000
		By Balance c/d	2,900
Total	1,52,000	Total	1,52,000

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