Purchase Furniture with Cash Journal Entry
The company purchases the furniture for internal use within the company.
Businesses purchase furniture for a variety of reasons. Some businesses may need furniture to use for potential customers or clients, while others may need furniture to actually use in their day-to-day operations.
In this article, we discuss the purchase of furniture for internal use in the office. The furniture is recorded as the fixed assets on the balance sheet. Fixed assets are a company’s long-term investments, which are not expected to be sold or converted into cash within the next year. Examples of fixed assets include buildings, machinery, equipment, and vehicles.
Furniture is considered a long-term investment because it is not typically sold or converted into cash within the next year. The furniture is recorded as a fixed asset on the balance sheet because it meets the criteria of being a long-term investment and is not expected to be sold or converted into cash within the next year.
Journal Entry for Purchase Furniture with Cash
The furniture is the fixed asset recorded on the company balance sheet. The company expects to use it for more than a year. When the company purchase furniture with cash, it must reflect the cash paid during fixed assets recording.
The journal entry is debiting fixed assets and credit cash paid to the supplier.
The fixed assets are the assets on the balance sheet. The cash is reduced from the company account.
After the company uses the furniture, it has to depreciate the cost of furniture to the depreciation expense.
The journal entry is debiting depreciation expense and credit accumulated depreciation.
Company ABC purchased furniture that cost $ 15,000 from the supplier using cash in the bank. The supplier has delivered the items to ABC’s location and the payment has been made. Please prepare journal entry for furniture purchases using cash.
ABC has purchased the furniture and received the items. It means the assets are ready to use, the company has to record them on the balance sheet. Moreover, ABC already makes the payment, so it also reflects the cash balance.
The journal entry is debiting furniture $ 15,000 and credit cash at bank $ 15,000.
|Cash at Bank||15,000|