Bought Plant and Machinery from Ramjee lal for the business for – ₹ 1,25,000 and an advance of ₹ 10,000 in cash is given.

Analysis of Transaction :

•  increases plant and machinery (assets) by ₹ 1,25,000,
• decreases cash by₹ 10,000 and
• increases liabilities (M/s Ramjee Lal as creditor) by ₹ 1,15,000.
• Increases in assets are debited whereas
• decreases in assets are credited.
•  increases in liabilities are credited.

Journal-

debit to furniture account and with credit to Cash and Ramjee Lal’s account.