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The correct journal entry to record a purchase of inventory on credit using a perpetual inventory system includes?

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Question ajoutée par Majid Wangade , Senior Accountant , KANTOUR LIMITED COMPANY ( Real Estate, Construction and Asset Management )
Date de publication: 2016/03/16
Utilisateur supprimé
par Utilisateur supprimé

GENERALLY INVENTORY PURCH.JOURNAL

 

IF CASH/BANK

PURCH.DR

CASH/BANK CR

IF CREDIT

PURCH.DR

SUPPLIER CR

Abdur Rahman Abdur Rauff
par Abdur Rahman Abdur Rauff , Executive - Systems and Control Assurance , Agro Harapan Lestari (Pvt.) Ltd, a Goodhope company

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

Muhammad Ramzan Tufail  ACCA
par Muhammad Ramzan Tufail ACCA , Assistant Finance Manager , Eltizam Asset Management Group

Dr. Purchases  X

Cr. To Creditor(Accounts Payable) X

Racquel Christine Perocho
par Racquel Christine Perocho , Accountant , KTC International LLC

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

Mohammad Abdul Hamid Omran Mohammad
par Mohammad Abdul Hamid Omran Mohammad , Head Of Accounting , Gas & Oil Field Services Co٠

Debit : Inventory 

credit : Account Payable A/P

Kripesh Krishnan Kutty Nair
par Kripesh Krishnan Kutty Nair , Merchandiser , Al Seer Group

Purchase A/c Dr

   To Creditors

Mohammad Iqbal Abubaker
par Mohammad Iqbal Abubaker , Jahaca Pty Ltd - Accounts Administrator , Jahaca Pty Ltd - Accounts Administrator

Debit Inventory Account

 

and Credit Accounts Payable

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