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Journal entry for Purachase of raw materials for credit?

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Question added by lasna roshan
Date Posted: 2017/11/17
Rajashekhar Enugula
by Rajashekhar Enugula , FORMULA ADVISORY NETWORK Pvt Ltd

Purchases ... Dr   XX

        To Supplier Cr    XX

lekshmi pillai
by lekshmi pillai , Finance Assistant , Student dot com marketing company LLC

Purchase of Raw materials = increase in inventory which is an asset. (when asset increases , value is debited)Purchase on credit = increase in money payable which is a liability. (when liability increases, value is credited)

eg. Purchase of raw materials for AED On credit. 

   Inventory a/c   (dr)

           Accounts Payable (cr)

A. Raw materials inventory $XX

         Accounts payable $XX

                   B. Accounts payable $XX

       Raw materials inventory $XX

               C. Accounts receivable $XX

               Accounts payable $XX

D. Raw materials inventory $XX

 Cash $XX

lets take an example to understand better 

Mr. A purchased raw material of Rs. 1000 from Mr. B on credit

the journal entry will be :-

 

Purchase Account Dr.      1000

   To Mr. B                            1000

( Being Material Purchased from Mr. B )

Saleem Raza
by Saleem Raza , Senior Accountant , Sweet Homes Group Of Companies

Debit Raw Material to Credit Supplier

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