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we selling orders, and deliver them by local courier, before we ship the order we wrap it and put it box. what is the journal entry when buy these packaging materials and what is the journal entry once consumed
Packaging Material are not the part of inventory so instead of taking them to stock we will consider it as expenses. so Packing material will be under indirect expenses and journal will be Packagong material account debit to cash / Bank.
1. Store Inventory Dr
Supplier Payable Cr
2. Store Inventory Cr
Packing Material Dr
3. Packing material Cr
Income Statement Dr
If you consider packing material as part of inventory
then
Dr Inventory of packing material
Cr Suppliers
- On consumption
Dr Cost of Packing material
Cr Inventory of Packing material
account closure entry
Dr Income statement
Cr Cost of Packing material
If you choose to expenses it off
Dr Packing material expenses
Cr Suppliers
account closure entry
Dr Income statement
Cr Packing material expenses
