Question

What are the journal entries to record the purchase of inventory on account?

Answer 1

Solution:

When inventory is purchased, inventory account is debited as this is a real account rule of debit and credit is "Debit what comes in, credit what goes out". Therefore inventory is coming and inventory account will be debited. Accounts payable will be credited as nature of accounts payable is personal account and rule of debit and credit is "Debit the receiver and credit the giver". Therefore creditors is giving inventory and their account will be credited.

Journal Entry
Particulars	Debit	Credit
Inventory A/c Dr	XXXX
To Accounts Payable		XXXX
(Being inventory purchased on account.)