Transactions related to the purchase and sale of goods can be of two types, Cash or Credit.
A. Cash Transactions: Cash transactions are those transactions in which payment is made or received in cash at the time of purchase or sale of goods. Cash transactions can be identified by:
- When the Name of the Party and Cash both are given in the transaction;
- When only Cash is given in the transaction;
- When the Name of the Party and Cash both are not given.
Journal Entry:
Example:
- Goods purchased from Bijay for Cash ₹5,000; or
- Goods purchased for cash ₹5,000; or
- Goods Purchased for ₹5,000.
Solution: For all these three cases, a common journal entry will be passed:
Example:
- Goods sold to Gaurav for Cash ₹10,000; or
- Goods sold for cash ₹10,000; or
- Goods sold for ₹10,000.
Solution: For all these three cases, a common journal entry will be passed:
B. Credit Transactions: Credit transactions are those transactions in which payment is not made or received at the time of purchase or sale of goods. Credit transactions can be identified by:
- When only the Name of the Party is given in the transaction.
Journal Entry:
Example: Goods purchased from Akanksha ₹7,000.
Solution:
Example: Goods sold to Sabya ₹11,000.
Solution: