How to pass the Journal Entries , if Same Company is debtor and Creditor for your company

In business , there are large number of transactions whose adjustments are very helpful to reduce work burden . These adjustment entries can acquit to you for making many journal entries . I can address you how can it possible .

For this I can take one simple example .

Mr. Vivek is the accountant of XYZ company who purchased Rs. 100000 goods from ZYX Company on credit . XYZ company also sold goods to ZYX of Rs. 50000 on credit . These are two separate transactions and contract with two companies . So , Mr. Vivek's duty is to record these transactions . Mr. Vivek should record first transaction of credit purchase with following way .

Purchase account debit 100000
ZYX company account credit 100000

Now , Mr. Vivek also pass the journal entry of credit sale

ZYX company account Debit 50000
Sale Account Credit 50000

Now Net Amount can be calculated

Total purchase - total sale = 100000 -50000 = 50000

The following single entry will be pass for net payment

ZYX ( as creditor ) account debit 100000
Bank Account credit 50000
ZYX ( as debtor ) account credit 50000