Question

N Apple bought goods on credit from Pencil Point Ltd. What is the double entry to record this transaction in the accounting records of Pencil Point Ltd? a. Debit N Apple, Credit Sales b. Debit Sales , Credit N Apple c. Debit Purchases, Credit Pencil Point ltd d. Debit Pencil point Ltd, Credit Purchases.

Answer 1

Answer:

c. Debit Purchases, Credit Pencil Point ltd

Explanation:

The journal entry for purchasing the goods from the Pencil point ltd on credit is given below;

Since the goods are purchased so here purchase account is debited and we credited the pencil point ltd

So, the journal entry is

Purchase Dr XXXX

          To Pencil Point ltd XXXX

(Being goods purchased on credit)

The purchase is debited as it increased the assets and pencil point ltd is credited as it also increased the liability