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A customer can purchase on two basis: cash or credit. In case of a cash purchase, the payment is made immediately by the customer however, in case of a credit purchase, the payment is expected to be made in the future as per the agreement.
Journal entry for purchase of machinery on credit basis:
(being machinery purchased on credit)
Journal entry for purchase of machinery for cash:
(being machinery purchased for cash)
Example
1. Mr. K purchased machinery from ABC Ltd. amounting to 20,000 on credit. The journal entry in the books of Mr. K is as follows:
(being machinery purchased on credit)
2. Mr. A purchased machinery from XYZ Ltd. amounting to 20,000 on a cash basis. The journal entry in the books of Mr. A is as follows:
(being machinery purchased for cash)
Hope this helps.