*Posting* Journalise the following transaction in the Book of M/s Beauti traders. Also post them in the ledger. | Dec. 2017 | | ₹ | |---|---|---| | 1. | Started business with cash | 2,00,000 | | 2. | Bought office furniture | 30,000 | | 3. | Paid into bank to open an current account | 1,00,000 | | 5. | Purchased a computer and paid by cheque | 2,50,000 | | 6. | Bought goods on credit from Ritika | 60,000 | | 8. | Cash sales | 30,000 | | 9. | Sold goods to Karishna on credit | 25,000 | | 12. | Cash paid to Mansi on account | 30,000 | | 14. | Goods returned to Ritika | 2,000 | | 15. | Stationery purchased for cash | 3,000 | | 16. | Paid wages | 1,000 | | 18. | Goods returned by Karishna | 2,000 | | 20. | Cheque given to Ritika | 28,000 | | 22. | Cash received from Karishna on account | 15,000 | | 24. | Insurance premium paid by cheque | 4,000 | | 26. | Cheque received from Karishna | 8,000 | | 28. | Rent paid by cheque | 3,000 | | 29. | Purchased goods on credit from Meena Traders | 20,000 | | 30. | Cash sales | 14,000 |

> [!TLDR] > The transactions are journalised on the double-entry rule and posted to the ledger. Cash closes at ₹95,000 (Dr); the Bank account, drawn on more than it received, ends in an overdraft of ₹1,77,000 (Cr); Ritika remains a creditor for ₹30,000. **Accounting treatment.** Assets bought (furniture, computer) are debited as they come in; cash/bank going out is credited. Credit purchases credit the supplier; credit sales debit the customer. A cheque payment credits Bank; a cheque receipt debits Bank. Goods returned to a supplier = Purchase Return (Cr); goods returned by a customer = Sales Return (Dr). When cheque payments exceed the bank balance the account shows a credit (overdraft) balance. **Journal of M/s Beauti Traders** | Date | Particulars | L.F. | Debit (₹) | Credit (₹) | |---|---|---|---|---| | 2017 Dec 1 | Cash A/c Dr. | | 2,00,000 | | | | To Capital A/c | | | 2,00,000 | | | (Business started with cash) | | | | | Dec 2 | Office Furniture A/c Dr. | | 30,000 | | | | To Cash A/c | | | 30,000 | | | (Office furniture bought) | | | | | Dec 3 | Bank A/c Dr. | | 1,00,000 | | | | To Cash A/c | | | 1,00,000 | | | (Current account opened with bank) | | | | | Dec 5 | Computer A/c Dr. | | 2,50,000 | | | | To Bank A/c | | | 2,50,000 | | | (Computer purchased, paid by cheque) | | | | | Dec 6 | Purchases A/c Dr. | | 60,000 | | | | To Ritika | | | 60,000 | | | (Goods bought on credit from Ritika) | | | | | Dec 8 | Cash A/c Dr. | | 30,000 | | | | To Sales A/c | | | 30,000 | | | (Cash sales) | | | | | Dec 9 | Karishna Dr. | | 25,000 | | | | To Sales A/c | | | 25,000 | | | (Goods sold to Karishna on credit) | | | | | Dec 12 | Mansi Dr. | | 30,000 | | | | To Cash A/c | | | 30,000 | | | (Cash paid to Mansi on account) | | | | | Dec 14 | Ritika Dr. | | 2,000 | | | | To Purchase Return A/c | | | 2,000 | | | (Goods returned to Ritika) | | | | | Dec 15 | Stationery A/c Dr. | | 3,000 | | | | To Cash A/c | | | 3,000 | | | (Stationery purchased for cash) | | | | | Dec

*Posting* Journalise the following transaction in the Book of M/s Beauti traders. Also post them in the ledger

Numerical Questions · Q20

Posting

Journalise the following transaction in the Book of M/s Beauti traders. Also post them in the ledger.

Dec. 2017		₹
1.	Started business with cash	2,00,000
2.	Bought office furniture	30,000
3.	Paid into bank to open an current account	1,00,000
5.	Purchased a computer and paid by cheque	2,50,000
6.	Bought goods on credit from Ritika	60,000
8.	Cash sales	30,000
9.	Sold goods to Karishna on credit	25,000
12.	Cash paid to Mansi on account	30,000
14.	Goods returned to Ritika	2,000
15.	Stationery purchased for cash	3,000
16.	Paid wages	1,000
18.	Goods returned by Karishna	2,000
20.	Cheque given to Ritika	28,000
22.	Cash received from Karishna on account	15,000
24.	Insurance premium paid by cheque	4,000
26.	Cheque received from Karishna	8,000
28.	Rent paid by cheque	3,000
29.	Purchased goods on credit from Meena Traders	20,000
30.	Cash sales	14,000

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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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The transactions of M/s Beauti Traders are journalised and posted; because bank payments (₹2,85,000) exceed bank receipts (₹1,08,000), the bank account closes with an overdraft (credit balance) of ₹1,77,000.

Key entries:

Date	Particulars	Debit (₹)	Credit (₹)
Dec 1	Cash Dr. — To Capital	2,00,000	2,00,000
Dec 3	Bank Dr. — To Cash	1,00,000	1,00,000
Dec 5	Computer Dr. — To Bank	2,50,000	2,50,000
Dec 6	Purchases Dr. — To Ritika	60,000	60,000

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The transactions are journalised on the double-entry rule and posted to the ledger. Cash closes at ₹95,000 (Dr); the Bank account, drawn on more than it received, ends in an overdraft of ₹1,77,000 (Cr); Ritika remains a creditor for ₹30,000.

Accounting treatment. Assets bought (furniture, computer) are debited as they come in; cash/bank going out is credited. Credit purchases credit the supplier; credit sales debit the customer. A cheque payment credits Bank; a cheque receipt debits Bank. Goods returned to a supplier = Purchase Return (Cr); goods returned by a customer = Sales Return (Dr). When cheque payments exceed the bank balance the account shows a credit (overdraft) balance.

Journal of M/s Beauti Traders

Date	Particulars	Debit (₹)	Credit (₹)
2017 Dec 1	Cash A/c Dr.	2,00,000
	To Capital A/c		2,00,000
	(Business started with cash)
Dec 2	Office Furniture A/c Dr.	30,000
	To Cash A/c		30,000
	(Office furniture bought)
Dec 3	Bank A/c Dr.	1,00,000
	To Cash A/c		1,00,000
	(Current account opened with bank)
Dec 5	Computer A/c Dr.	2,50,000
	To Bank A/c		2,50,000
	(Computer purchased, paid by cheque)
Dec 6	Purchases A/c Dr.	60,000
	To Ritika		60,000
	(Goods bought on credit from Ritika)
Dec 8	Cash A/c Dr.	30,000
	To Sales A/c		30,000
	(Cash sales)
Dec 9	Karishna Dr.	25,000
	To Sales A/c		25,000
	(Goods sold to Karishna on credit)
Dec 12	Mansi Dr.	30,000
	To Cash A/c		30,000
	(Cash paid to Mansi on account)
Dec 14	Ritika Dr.	2,000
	To Purchase Return A/c		2,000
	(Goods returned to Ritika)
Dec 15	Stationery A/c Dr.	3,000
	To Cash A/c		3,000
	(Stationery purchased for cash)
Dec 16	Wages A/c Dr.	1,000
	To Cash A/c		1,000
	(Wages paid)
Dec 18	Sales Return A/c Dr.	2,000
	To Karishna		2,000
	(Goods returned by Karishna)
Dec 20	Ritika Dr.	28,000
	To Bank A/c		28,000
	(Cheque given to Ritika)
Dec 22	Cash A/c Dr.	15,000
	To Karishna		15,000
	(Cash received from Karishna on account)
Dec 24	Insurance Premium A/c Dr.	4,000
	To Bank A/c		4,000
	(Insurance premium paid by cheque)
Dec 26	Bank A/c Dr.	8,000
	To Karishna		8,000
	(Cheque received from Karishna)
Dec 28	Rent A/c Dr.	3,000
	To Bank A/c		3,000
	(Rent paid by cheque)
Dec 29	Purchases A/c Dr.	20,000
	To Meena Traders		20,000
	(Goods bought on credit from Meena Traders)
Dec 30	Cash A/c Dr.	14,000
	To Sales A/c		14,000
	(Cash sales)
	Total	8,28,000	8,28,000

Ledger (principal accounts)

Cash Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Capital A/c	2,00,000	By Office Furniture A/c	30,000
To Sales A/c	30,000	By Bank A/c	1,00,000
To Karishna	15,000	By Mansi	30,000
To Sales A/c	14,000	By Stationery A/c	3,000
		By Wages A/c	1,000
		By Balance c/d	95,000
Total	2,59,000	Total	2,59,000

Bank Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Cash A/c	1,00,000	By Computer A/c	2,50,000
To Karishna	8,000	By Ritika	28,000
To Balance c/d (overdraft)	1,77,000	By Insurance Premium A/c	4,000
		By Rent A/c	3,000

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