Journal Entry Distributions—Purchases

Purchase transactions are posted to the General Ledger in the following manner:

Purchase Journal

Transaction

Debits

Credits

Purchase of expense on account

Purchase Expense

Accounts Payable*

Credit memo

Accounts Payable*

Inventory or Purchase Expense

Purchase of non-stock, labor, or service items on account

Salary and Wages Expense

(or miscellaneous item expense)

Accounts Payable*

Purchase of stock or assembly items on account

Inventory

Accounts Payable*

Cash Disbursements Journal

Transaction

Debits

Credits

Cash purchase (payment made directly on invoice)

Accounts Payable*

Cash

*For companies using the cash-basis accounting method, Accounts Payable is replaced with <Cash Basis> and is not recorded in the General Ledger. Instead, expense (or inventory) and cash are recorded when the purchase is paid.