Double Entry (BPP 4.3)

This topic has 3 replies, 2 voices, and was last updated 5 years ago by John Moffat.

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July 18, 2020 at 3:15 am #577252
Sourav9271
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What is journal entry for these transactions.?
1. Purchased goods on credit from T rader: 450
2. Return of goods purchased on credit last month to T Robbie: 700

Ans: Dr purchase :450
Dr Trade Payables: 250
Cr Purchase return:700

Sir, Why are payables debited?
And why are payables 250 when purchases are 450
July 18, 2020 at 10:00 am #577278
John Moffat
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It is the net result of two transactions:

When goods are purchased:
DR Purchases 450
CR Payables. 450

When goods are returned:
DR Payables 700
CR Returns 700

So the net result of the entries on payables is a debit of 250 (700 – 450)
July 21, 2020 at 1:09 am #577512
Sourav9271
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Sir, but isn’t irrelevant when the supplier from which goods are bought and the supplier to which goods are returned are different?
July 21, 2020 at 7:46 am #577521
John Moffat
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The payables account shows the totalling to suppliers and it is irrelevant which supplier. It is in the payables ledger that there is an account for each separate supplier, but that is not part of the double entry.
Watch my lectures on Books of Prime Entry 🙂
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