Example of Journal Entry for Purchases

Example of Journal Entry for Purchases

There are three types of purchases entries i.e. cash purchases, credit purchases and partly paid purchases.  Purchases being inventory item are debited and other head of account i.e. account receivable or bank as case may be is credited.

Example of Cash Purchases

Hakeem Khan made cash purchases for $ 5000. Hakeem Khan also purchase Good from Ali and issued a cheque amounting $ 3000.

Solution

In cash purchases the purchases is debited being the inventory item and the cash or bank account is credited as case may be. In business world cash and bank purchases both are named as cash purchases.

Date	Particulars	Dr	Cr
11 Nov ,2014	Purchases a/c	500
11 Nov ,2014	Cash a/c		500

Date	Particulars	Dr	Cr
13 Nov ,2014	Purchases a/c	300
13 Nov ,2014	Bank a/c		300

Example of Credit purchases

Fareed Khan Company made purchases from Rachel brothers amounting $ 1000.

Solution

In credit purchase the purchase account is debited and supplier account is credited being liability of the organization.

Date	Particulars	Dr	Cr
13 Nov ,2014	Purchases a/c	1000
13 Nov ,2014	Rachel a/c		1000

Example of partly paid purchases

Raheem & Co made purchases of $5,000 from aleem and paid $2,000 only the balance amount is to be paid in next month.

Solution

Purchase is debited being the inventory part and the credit part of the transaction is divided between cash and supplier. This transaction can also be recorded as two separate entries.

Date	Particulars	Dr	Cr
13 Nov ,2014	Purchases a/c	5,000
13 Nov ,2014	Cash a/c		2,000
	Aleem a/c		3,000