Journal Entry for Assets Purchased | Asset Purchase
Arjun EP
ASSETS PURCHASED
Assets are the economic resources reported in the balance sheet.
Assets represent probable future economic benefits.
The values of tangible assets are also known fixed assets.
They have their physical substance. Intangible assets do not have physical substance.
Fixed assets are land and building, plant and machinery, furniture and fitting, vehicle, equipment etc.
They are purchased for resale.
By using assets, depreciation is charged on it.
After using asset for long time, it becomes out of order; then it is sold.
At the time of asset selling, there may be capitalized profit or loss.
Assets or Fixed Assets Purchased
|
Plant and machinery account Land and building account Furniture and fitting account Equipment account Vehicle account Computer/laptop account To Cash account To Bank account To XYZ Suppliers account To Bills payable (A/P) account (Being- assets purchased ……………. |
Dr Dr Dr Dr Dr Dr
|
Value of assets Value of assets Value of assets Value of asset Value of asset Value of asset Cash given Cheque given Credit purchased from firm Credit purchased and bill accepted |
Increase assets Increase assets Increase assets Increase assets Increase assets Increase assets Decrease in assets Decrease in assets Increase in liabilities Increase in liabilities |
Keep in Mind (KIM)
|
We assume trader purchases and sales single or similar types of goods. |
|
|
For computer trader, computers are goods. For shoes trader, shoes are goods. For cloth merchant, cloth is goods. For furniture trader, furniture is goods. For stationer, stationery is goods. For car vendor, car is goods. For grocery vendor, rice, sugar, soap etc are goods. |
For computer trader, shoes are not goods. For shoes trader, furniture is not goods. For cloth merchant, car is not goods. For furniture trader, cloth is not goods. For stationer, furniture is not goods. For car vendor, computer is not goods For grocery vendor, furniture is not goods. |
Journal Entry
In the book of …………
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
|
Plant and machinery Land and building Furniture and fitting account Equipment account Vehicle account Other assets account To Cash account To Bank account To XYZ Suppliers account To Bills payable account |
Dr Dr Dr Dr Dr Dr
|
|
xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx |
xxxxx xxxxx xxxxx xxxxx |
|
|
(Being- asset (name of asset) purchased……………………..……… … |
|
|
|
|
PROBLEM: 4A
SK Book Supplier purchased furniture worth Rs 60,000
Required: Journal entry
[Answer: Asset = Rs 60,000]
SOLUTION:
Journal Entry
In the book of SK Book Supplier
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
|
Furniture account To Cash account (Being: furniture purchased in cash |
Dr
|
|
60,000 |
60,000 |
|
|
. |
|
|
||
Journal Entry for American Style
|
Date |
Particulars |
|
Debit $ |
Credit $ |
|
|
Furniture account Cash account To record furniture purchased for cash |
|
60,000
|
60,000
|
Journal Entry for European Style
|
Date |
Particulars |
|
|
€ |
€ |
|
|
Furniture account Cash account To record furniture purchased for cash |
Dr
|
|
60,000
|
60,000
|
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TRIAL BALANCE & ADJUSTED TRIAL BALANCE http://tiny.cc/c59jkz
BANK RECONCILIATION STATEMENT (BRS) http://tiny.cc/q59jkz
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PROBLEM: 4B
Ajay Cold Store purchased deep-freezer for Rs 45,000 and furniture for Rs 25,000 by cheque.
Required: Journal entry
[Answer: Assets = 70,000]
SOLUTION:
Journal Entries
In the book of Ajay Cold Store
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
|
Deep-freezer account To Cash account (Being- deep-freezer purchased in cash) |
Dr
|
|
45,000
|
45,000
|
|
|
Furniture account To Bank account (Being- furniture purchased by cheque) . |
Dr
|
|
25,000 |
25,000 |
Or
Journal Entry
In the book of Ajay Cold Store
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
|
Deep-freezer account Furniture account To Cash account To Bank account (Being- deep-freezer and furniture purchased in cash) . |
Dr Dr
|
|
45,000 25,000 |
45,000 25,000 |
PROBLEM: 4C
JK Soap Industry has purchased following assets:
Computer by cheque Rs 30,000
Printer for cash Rs 10,000
Furniture Rs 7,000 from Sharma Furniture Traders
Required: Journal entry
[Answer: Assets = 47,000]
SOLUTION
Journal Entries
In the book of JK Soap Industry
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
|
Computer account To Bank account (Being- computer purchased and cheque issued) |
Dr |
|
30,000
|
30,000
|
|
|
Printer account To Cash account (Being- printer purchased in cash) |
Dr |
|
10,000 |
10,000 |
|
|
Furniture account To Sharma Furniture Traders (Being- furniture purchased on credit) . |
Dr |
|
7,000 |
7,000 |
Or
Journal Entries
In the book of JK Soap Industry
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
|
Computer account Printer account Furniture account To Cash account To Bank account To Sharma Furniture Traders |
Dr Dr Dr
|
|
30,000 10,000 7,000 |
30,000 10,000 7,000 |
|
|
(Being- sundry assets purchased in cash and on credit) . |
|
|
|
|
PROBLEM: 4D
MK Departmental Store has following information:
July 3, Mini truck purchased from Sipardi Auto at Rs 800,000.
July 12, Air conditioner purchased for Rs 80,000 and cheque issued.
July 18, Furniture purchased worth Rs 25,000 by cash.
July 31, Ceiling fans purchased from Bipin Rs 10,000.
Required: Journal entries
[Answer: Total assets = 915,000]
SOLUTION
Journal Entries
In the book of MK Departmental Store
|
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
July 3 |
Mini truck account To Sipardi Auto account (Being- mini truck purchased on credit) |
Dr |
|
800,000
|
800,000
|
|
July 12 |
Air conditioner account To Bank account (Being- air conditioner purchased by cheque) |
Dr |
|
80,000 |
80,000 |
|
July 18 |
Furniture account To Cash account (Being- furniture purchased in cash) |
Dr |
|
25,000 |
25,000 |
|
July 31 |
Ceiling fans account To Bipin’s account (Being- furniture purchased on credit) . |
Dr |
|
10,000 |
10,000 |
######
|
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 4
JK Transport has following extracted information:
July 3, Office furniture purchased in cash Rs 55,000.
July 18, Computer purchased from RB Tech Rs 25,000.
July 20, Canon Printer purchased from SB Computer House of Rs 15,000 by paying Rs 5,000 partial payment.
July 31, Iron safe purchased on credit worth Rs 18,000.
Aug 12, Air conditioner purchased for Rs 60,000 by cheque
Aug 15, Delivery van purchased of Rs 12,00,000 and bill accepted.
Required: Journal entries
***********
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