Learn why a supplier’s account is debited when part of a credit purchase is paid. This Hindi–English video lesson uses a ₹3,000 cash payment against an ₹8,000 supplier balance and checks the remaining liability.
Example: ₹3,000 paid to a supplier
A business purchased Furniture worth ₹8,000 on credit. The original credit purchase created a Supplier liability of ₹8,000. The business now pays ₹3,000 in cash.
Correct Journal Entry
| Account | Debit ₹ | Credit ₹ |
|---|---|---|
| Supplier A/c | 3,000 | |
| To Cash A/c | 3,000 |
Entry: Supplier A/c Dr ₹3,000; To Cash A/c ₹3,000.
Why is the Supplier Account debited?
Supplier को payment करने पर business की Liability घटती है. A decrease in this payable is recorded on the Debit side of the Supplier A/c. Cash is an Asset; cash decreases when payment is made, so Cash A/c is credited.
- Supplier liability before payment: ₹8,000
- Cash paid: ₹3,000
- Supplier liability after payment: ₹5,000
- Total Debit = Total Credit: ₹3,000
This payment entry is separate from the original credit-purchase entry. At the purchase date, Furniture A/c was debited and Supplier A/c was credited by ₹8,000. At the payment date, only the payable and cash change.
Common mistakes to avoid
- Do not debit Furniture again when paying the supplier.
- Do not credit Bank unless the payment was actually made through the bank.
- Do not treat repayment of the payable as a new Expense.
- Use the supplier’s individual name in the ledger when the question provides it.
Quick practice with answers
Question 1: A supplier is owed ₹12,000. The business pays ₹5,000 in cash. What is the entry and remaining payable?
Answer: Supplier A/c Dr ₹5,000; To Cash A/c ₹5,000. Remaining payable = ₹7,000.
Question 2: The same ₹5,000 is paid by bank transfer instead of cash. Which account is credited?
Answer: Bank A/c is credited: Supplier A/c Dr ₹5,000; To Bank A/c ₹5,000.
Continue learning: Why Businesses Need Accounting, Journal Entries Step by Step, Debit and Credit Explained Through Logic, Accounting Logic System™, and Free Accounting Video Lessons. For additional exercises and current resource availability, see Premium Accounting Practice Resources; this link does not indicate that a paid product is currently available for purchase.
Video and lesson by Ejaj Abubakar Rangunwala · Rangunwala’s Academy.