Journal Entry Distributions—Purchase Orders

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

Purchase Orders Journal

Transaction

Debits

Credits

Purchase of expense on account

Purchase Expense

Accounts Payable

Purchase of stock or assembly items on account

Inventory

Accounts Payable

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

Salary and Wages Expense

(or miscellaneous item expense)

Accounts Payable

Credit memo

Accounts Payable

Inventory or Purchase Expense

Note: 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.