Accounting treatment for Purchase of Fixed Assets, paid by Cash

on

In this post, now let's know about complete accounting record keeping procedure for Purchase of Fixed Assets (payment made by Cash.) with Journal Entry and Ledger posting.

Fixed Asset means the goods(like Land and Building, Plant and Machinery, Furniture and Fixture etc.) which is not a part of Raw Materials in manufacturing unit, Trading goods in Trading Business, Service in Service Business.

Related Books of Account for Purchase of Fixed Assets through Cash payment are :

  • Journal Register.

  • Fixed Asset Ledger Account.

  • Cash Book/Cash Account.

Accounts involved in this transaction,

Debit Account :

  • Fixed Asset Account

Credit Account:

  • Cash Account

Journal Entry

Journal Entry for Purchase of Fixed Asset(paid by Cash)
Ledger Posting

In Fixed Asset Account

Purchase of Fixed Asset through Cash payment - Posting in Fixed Asset Ledger Account.
In Cash Account

Purchase of Fixed Asset through Cash payment - Posting in Cash Account.

Example :

In the Books of M/s. Laxmi Tyres(Nature of Business - Trading of Tyre and Tubes). Purchased Furniture and Fixture for ₹35,700/- from M/s.Escort Furniture on dt.17/03/2022 as per Cash Memo No.1948 received.

Pass necessary Journal Entry and Post them into their respective Ledger Accounts.

In the above transaction,

Debit Account is :

  • Furniture & Fixture A/c

Credit Account is :

  • Cash A/c

Journal Entry

Journal Entry for purchase of Fixed Assets, paid by Cash

Ledger Posting

In Furniture & Fixture A/c

Purchase of Fixed Asset, paid by Cash - Posting in Furniture & Fixture Ledger Account

In Cash Account

Location: Cuttack, Odisha, India

Comments

Post a Comment