Bought goods for cash journal entry is Purchase Account Debit and Cash Account Credit. When a business purchases goods in cash, the transaction involves a increase in inventory or purchases and a decrease in cash. This is recorded in the journal to keep track of the financial activities accurately.
Example Scenario
Let’s assume a company purchases goods worth ₹50,000 in cash on 01-07-2024.
Journal Entry to Record Purchase of Goods for Cash
| Date | Account Title | Debit (INR) | Credit (INR) |
|---|---|---|---|
| 01-07-2024 | Purchases | 50,000 | |
| 01-07-2024 | To Cash | 50,000 |
Explanation:
- Purchases Account Debit: Increases the purchases account, because of recognizing the acquisition of goods.
- Cash Account Credit: Decreases the cash account, because of reflecting the outflow of cash for the purchase.
Summary
- Purchases: This account is debited to record the increase in inventory or goods bought.
- Cash: This account is credited to reflect the decrease in cash due to the payment for the goods.
This entry ensures that the financial statements accurately reflect the company’s financial activities, maintaining the integrity of the accounting records.