The Purchase Of An Asset On Credit Journal Entry

The purchase of an Asset on credit or on account is the result of debit to the asset account and credit to the Accounts Payable Account and there is no Cash Account involved in it based on Accrual Basis of Accounting.

The Journal Entry is given below:

                                       Asset a/c  XXX

 

                                                    Accounts Payable a/c  XXX

                                                    (Purchased Asset On Credit)

You May Also Be Interested In, “The Purchase Of An Asset For Cash”

For example, if the company purchased furniture on account from Mr. A & Co. of Rs. 50000, then furniture account is debited and accounts payable account (Mr. A & Co.) is credited as shown below by considering the example:

                                               Furniture a/c  50000

                                                                  Mr. A & Co.  50000

                                                 (Purchased Furniture On Credit)