Purchased furniture for cash journal entry is Furniture/Office Equipment Account Debit because increases the fixed asset account, reflecting the addition of the purchased furniture. Credit to Cash/Bank Account because decreases the cash or bank account balance, reflecting the payment made for the furniture. When a business purchases furniture for cash, it needs to record the transaction to reflect the addition to fixed assets and the decrease in cash.
Key Concepts
- Furniture/Office Equipment Account: The account representing the cost of furniture purchased, considered a fixed asset.
- Cash/Bank Account: The account from which the payment for the furniture is made.
Journal Entry for Purchased Furniture for Cash
Example Scenario
Assume a company purchases furniture worth ₹50,000 for cash on 10-10-2023.
Step-by-Step Journal Entry
- Record the Purchase of Furniture
| Date | Account Title | Debit (INR) | Credit (INR) | Description |
|---|---|---|---|---|
| 10-10-2023 | Furniture/Office Equipment | 50,000 | Purchase of furniture | |
| 10-10-2023 | To Cash/Bank | 50,000 | Payment for furniture |
Explanation
- Debit to Furniture/Office Equipment: This increases the fixed asset account, reflecting the addition of the purchased furniture.
- Credit to Cash/Bank: This decreases the cash or bank account balance, reflecting the payment made for the furniture.
Conclusion
Accurately recording the purchase of furniture for cash is essential for maintaining precise financial records and tracking fixed assets. Properly managing these transactions ensures that the business’s assets and cash balances are accurately represented in the financial statements, contributing to better financial management and reporting.