*Posting* Journalise the following transaction in the Books of the M/s Bhanu Traders and Post them into the Ledger. | December, 2017 | | ₹ | |---|---|---| | 1. | Started business with cash | 92,000 | | 2. | Deposited into bank | 60,000 | | 4. | Bought goods on credit from Himani | 40,000 | | 6. | Purchased goods from cash | 20,000 | | 8. | Returned goods to Himani | 4,000 | | 10. | Sold goods for cash | 20,000 | | 14. | Cheque given to Himani | 36,000 | | 17. | Goods sold to M/s Goyal Traders. | 3,50,000 | | 19. | Drew cash from bank for personal use | 2,000 | | 21. | Goyal traders returned goods | 3,500 | | 22. | Cash deposited into bank | 20,000 | | 26. | Cheque received from Goyal Traders | 31,500 | | 28. | Goods given as charity | 2,000 | | 29. | Rent paid | 3,000 | | 30. | Salary paid | 7,000 | | 31. | Office machine purchased for cash | 3,000 |

*Posting* Journalise the following transaction in the Books of the M/s Bhanu Traders and Post them into the Le

Numerical Questions · Q19

Posting

Journalise the following transaction in the Books of the M/s Bhanu Traders and Post them into the Ledger.

December, 2017		₹
1.	Started business with cash	92,000
2.	Deposited into bank	60,000
4.	Bought goods on credit from Himani	40,000
6.	Purchased goods from cash	20,000
8.	Returned goods to Himani	4,000
10.	Sold goods for cash	20,000
14.	Cheque given to Himani	36,000
17.	Goods sold to M/s Goyal Traders.	3,50,000
19.	Drew cash from bank for personal use	2,000
21.	Goyal traders returned goods	3,500
22.	Cash deposited into bank	20,000
26.	Cheque received from Goyal Traders	31,500
28.	Goods given as charity	2,000
29.	Rent paid	3,000
30.	Salary paid	7,000
31.	Office machine purchased for cash	3,000

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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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Each transaction is journalised on the dual-aspect rule, then posted to the ledger.

Date	Particulars	Debit (₹)	Credit (₹)
Dec 1	Cash A/c Dr. — To Capital A/c	92,000	92,000
Dec 2	Bank A/c Dr. — To Cash A/c	60,000	60,000
Dec 4	Purchases A/c Dr. — To Himani	40,000	40,000
Dec 6	Purchases A/c Dr. — To Cash A/c	20,000	20,000
Dec 8	Himani Dr. — To Purchase Return A/c	4,000	4,000
Dec 10	Cash A/c Dr. — To Sales A/c	20,000	20,000
Dec 14	Himani Dr. — To Bank A/c	36,000	36,000
Dec 17	Goyal Traders Dr. — To Sales A/c	3,50,000	3,50,000
Dec 19	Drawings A/c Dr. — To Bank A/c	2,000	2,000
Dec 21	Sales Return A/c Dr. — To Goyal Traders	3,500	3,500
Dec 22	Bank A/c Dr. — To Cash A/c	20,000	20,000
Dec 26	Bank A/c Dr. — To Goyal Traders	31,500	31,500

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Every transaction of M/s Bhanu Traders is recorded in the Journal on the double-entry (dual-aspect) rule, then each debit/credit is carried to its own ledger account. The accounts are balanced to give Cash ₹19,000, Bank ₹73,500 and Goyal Traders (debtor) ₹3,15,000.

Accounting treatment. A real account is debited when an asset comes in and credited when it goes out; a personal account is debited for the receiver and credited for the giver; a nominal account is debited for expenses/losses and credited for incomes/gains. Cash and cheque sales/receipts increase Cash/Bank (debit); payments reduce them (credit). Goods returned to a supplier are a Purchase Return (credit); goods returned by a customer are a Sales Return (debit). Goods given as charity are credited to Purchases at cost and debited to Charity.

Journal of M/s Bhanu Traders

Date	Particulars	Debit (₹)	Credit (₹)
2017 Dec 1	Cash A/c Dr.	92,000
	To Capital A/c		92,000
	(Business started with cash)
Dec 2	Bank A/c Dr.	60,000
	To Cash A/c		60,000
	(Cash deposited into bank)
Dec 4	Purchases A/c Dr.	40,000
	To Himani		40,000
	(Goods bought on credit from Himani)
Dec 6	Purchases A/c Dr.	20,000
	To Cash A/c		20,000
	(Goods purchased for cash)
Dec 8	Himani Dr.	4,000
	To Purchase Return A/c		4,000
	(Goods returned to Himani)
Dec 10	Cash A/c Dr.	20,000
	To Sales A/c		20,000
	(Goods sold for cash)
Dec 14	Himani Dr.	36,000
	To Bank A/c		36,000
	(Cheque given to Himani)
Dec 17	Goyal Traders Dr.	3,50,000
	To Sales A/c		3,50,000
	(Goods sold on credit to Goyal Traders)
Dec 19	Drawings A/c Dr.	2,000
	To Bank A/c		2,000
	(Cash drawn from bank for personal use)
Dec 21	Sales Return A/c Dr.	3,500
	To Goyal Traders		3,500
	(Goods returned by Goyal Traders)
Dec 22	Bank A/c Dr.	20,000
	To Cash A/c		20,000
	(Cash deposited into bank)
Dec 26	Bank A/c Dr.	31,500
	To Goyal Traders		31,500
	(Cheque received from Goyal Traders)
Dec 28	Charity A/c Dr.	2,000
	To Purchases A/c		2,000
	(Goods given as charity)
Dec 29	Rent A/c Dr.	3,000
	To Cash A/c		3,000
	(Rent paid)
Dec 30	Salary A/c Dr.	7,000
	To Cash A/c		7,000
	(Salary paid)
Dec 31	Office Machine A/c Dr.	3,000
	To Cash A/c		3,000
	(Office machine purchased for cash)
	Total	7,53,000	7,53,000

Ledger

Cash Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Capital A/c	92,000	By Bank A/c	60,000
To Sales A/c	20,000	By Purchases A/c	20,000
		By Rent A/c	3,000
		By Salary A/c	7,000
		By Office Machine A/c	3,000
		By Balance c/d	19,000
Total	1,12,000	Total	1,12,000

Bank Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Cash A/c	60,000	By Himani	36,000
To Cash A/c	20,000	By Drawings A/c	2,000
To Goyal Traders	31,500	By Balance c/d	73,500
Total	1,11,500	Total	1,11,500

Capital Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance c/d	92,000	By Cash A/c	92,000
Total	92,000	Total	92,000

Himani (Creditor)

Particulars	Amount (₹)	Particulars	Amount (₹)
To Purchase Return A/c	4,000	By Purchases A/c	40,000

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