CBSE Class 11-commerce Answered
New furniture was purchased for Rs50,000 and in exchange old furniture valued at Rs5,000(book value Rs2,000) was given. Entry for purchase was recorded at Rs45,000 in the books of accounts.
Pass the journal entry .
Asked by sanyajain132002 | 11 Feb, 2019, 05:57: PM
Expert Answer
In the above case, New asset has been purhcased in exchange of Old asset and therefore, New Asset Account is to be debited and the Old Asset is to be credited. Any amount paid should be shown as an outflow of cash/bank by crediting Cash/Bank Account. Since, an asset is purchased, only asset accounts are debited in the entry and no Purchases Account will be used to record such a transaction.
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