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GENERALLY INVENTORY PURCH.JOURNAL
IF CASH/BANK
PURCH.DR
CASH/BANK CR
IF CREDIT
PURCH.DR
SUPPLIER CR
Purchase of inventory:
In a typical ERP environment, what happens is Purchases are made using an "Order".
Upon receipt of the inventory, a GRN (Goods Received Note) is raised. Upon generating a GRN, the ERP records the transaction in the books in the following manner:
Dr. Inventory
Cr. Inventory Accrual A/C (or any similar temporal ledger account)
Thereafter, upon receipt of actual supplier's invoice, Accounts Payable can be updated. This is where the actual liability to the inventory supplier gets actually accrued (including accounting for elements with regards to indirect taxes)
Dr. Inventory Accrual A/C (or any similar temporal ledger account)
Cr. Supplier
Dr. Purchases X
Cr. To Creditor(Accounts Payable) X
Perpetual Inventory System is more preferred system as it can yield reasonably accurate results if managed properly, however there can be differences against the actual inventory and the recorded inventory due to theft and unrecorded transaction.
Entry: Debit: Inventory ( cost and freight associated in delivery)
Credit: Accounts Payable
Debit : Inventory
credit : Account Payable A/P
Purchase A/c Dr
To Creditors
Debit Inventory Account
and Credit Accounts Payable
