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Company A has purchased goods worth Rs. 25000 from company B and made the cash payment of Rs 5000 and remaining will be payable with in 30 days.

Assume that there is a late payment charge @ 2% on remaining amount as the invoice was received after due date from company B.

Pass the journal entry in the books of company A for all the above transactions.

Answer Posted / navin kumar

In the Books of Company A

Purchase A/C Dr 25000
To Cash 5000
To B Company 20000

Profit and Loss A/C Dr 400
To late payment Charge 400

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