Purchases Journal Entry

Purchases Journal Entry

Purchases being expenses for the organization is debited, while other aspect which may be cash or creditor is credited. In case of cash purchases cash is credited, while in case of credit purchases creditor is credited. This has been explained with example

Types of Purchases Journal Entry

Purchases journal entry can be broadly classified into cash purchase journal entry and credit purchase journal entry. These both entries have been explained with an example below;

Cash purchases of $ 40,000.

Credit purchases of $ 50,000 from Ali.

1.   Cash purchase Journal entry:

In case of cash purchases, the amounts of purchases are debited and cash credited as shown below.

Date	Particulars	Dr.	Cr.
	Purchases	$ 40,000
	Cash		$ 40,000

2.   Credit purchase Journal entry:

In credit purchases, the amounts of purchases are debited and creditor is credited.

Date	Particulars	Dr.	Cr.
	Purchases	$ 50,000
	Ali		$ 40,000