Purchase Transaction Journal Entries

Michael Brown

10 years ago

The purchase transaction journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of purchase transactions.

In each case the purchase transaction entries show the debit and credit account together with a brief narrative. For a fuller explanation of journal entries, view our examples section.

Typical Purchase Transaction Journal Entries

Cash purchase of inventory
Account	Debit	Credit
Inventory	XXX
Cash		XXX

Cash payment of freight in and shipping costs
Account	Debit	Credit
Inventory	XXX
Cash		XXX

Inventory is purchased on account
Account	Debit	Credit
Inventory	XXX
Accounts payable		XXX

Inventory is returned prior to payment
Account	Debit	Credit
Accounts payable	XXX
Inventory		XXX

Payment is made and cash discount is taken
Account	Debit	Credit
Accounts payable	XXX
Cash		XXX
Inventory (Discount)		XXX

Last modified November 12th, 2019 by Michael Brown

About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.