Journal Entry for Cash and Credit Transactions (original) (raw)
Last Updated : 16 Apr, 2026
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 C**ash 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:
