Journal Entry Distributions—Vendor Credit Memos

Purchase Journal

Transaction	Debits	Credits
Credit memo	Accounts Payable	Inventory or Purchase Expense
Purchase of non-stock, labor, or service items on account	Accounts Payable	Salary and Wages Expense (or miscellaneous item expense)
Purchase of stock or assembly items on account	Accounts Payable	Inventory

Transaction

Debits

Credits

Credit memo

Accounts Payable

Inventory or Purchase Expense

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

Accounts Payable

Salary and Wages Expense

(or miscellaneous item expense)

Purchase of stock or assembly items on account

Accounts Payable

Inventory

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 credit memo is used in Payments