student
1922 Points
Joined May 2008
Ok Sushanta see- You will purchase machinery so you will pay cash/cheque.
So the Entry will be-
Machinery Dr.
To Bank A/c
Now you are confused with Reserve & Surplus. But it has no impact on reserves as this is not your expense. You are purchasing an asset. Just the form of asset is changed i.e. from bank to Machinery.
Dont be confused with Reserves. Reserves are debited only by the amount of business loss.