What is furniture journal entry?

Introduction

Furniture is treated as a fixed asset of an enterprise unless it deals in the manufacturing or the trade of furniture. As stock in trade, it will be treated as current assets.

In both cases, they are real accounts. Hence, the golden rule of accounting will be the same.

But, when it comes to journal entries, Furniture A/c will appear only when it is treated as a fixed asset.

No journal entries are passed in the stock-in-trade account except for some balance transferring entries.

Journal Entries on taking Furniture as a fixed asset

Taking furniture as a fixed asset, we can pass various entries related to it. Since furniture is an asset, any increase is debited and the decrease is credited.

Also, furniture is a real account which means the golden rule of accounting  applicable is, “Debit what comes in and credit what goes out”.

Following are the basic entries related to furniture.

Purchase of furniture

The most common entry related to furniture is the purchase of furniture:

Here Furniture A/c is increased, hence debited.
Cash or Bank being reduced is credited.

Sale of furniture

 *In case of loss

**In case of profit

 On the sale of furniture, its balance gets reduced, hence credited.
Cash or Bank is debited as cash comes in hand or into the bank.

Also, profit or loss may arise due to the difference in sale value and the carrying amount of the furniture A/c.

The difference is debited to Profit and Loss A/c in case of loss and credited in case of profit.

Depreciation on Furniture

Here, furniture is credited as it is decreased by the amount of depreciation.

Depreciation being a non-cash expense, is debited.

Journal Entries on taking Furniture as stock in trade

When furniture is stock of trade of a business, the journal entries will be like normal purchase and sales entries as below:

There will be no furniture account.