6. Purchases Journal

What is the purchases journal?

Used to record all credit purchases including those for inventory.

What is the Accounts Payable Cr. column used to record?

The amounts owed to each creditor.

What is the Inventory Dr. column used to record?

Inventory purchases

What columns are in the Purchases Journal?

Date, Account, Date of Invoice, Terms, PR, Accounts Payable Cr., Inventory Dr., Office Supplies Dr., Other Accounts Dr.

When inventory is purchased how is this entered?

Enter the inventory amount purchased into Inventory Dr. and Accounts Payable Cr.

If there is no column for purchases, lets say store supplies, what column would we put it in?

Other Accounts Dr.

Can the columns in the purchases journal change?

Yes, a company decides which separate columns are necessary. If a company orders a lot of office supplies for example, it might choose to have an office supply column.

What does the Other Accounts Dr. column allow?

Allows the purchases journal to be used for any purchase on credit.

When are the amounts in the Accounts Payable Cr. column posted and where?

They are immediately posted to individual creditor accounts in the accounts payable subsidiary ledger.

When are the individual amounts in the Other Accounts Dr. column posted and where?

Are immediately posted to their general ledger accounts.

At the end of the period, what is posted to the general ledger accounts?

All column totals in the Purchases Journal except the Other Accounts Dr. column are posted to their general ledger accounts.

When are accounts payable balances in the subsidiary ledger proved?

Afer posting.

How do we prove the subsidiary ledger?

By preparing a schedule of accounts payable.

What is a schedule of accounts payable?

A list of accounts from the accounts payable (subsidiary) ledger with their balances and the total at a specific date.

When is the accounts payable ledger assumed correct?

If the total of the individual balances equals the balance of the Accounts Payable controlling account.

Review figure under proving the ledger under Purchases journal.

Review Need-To-Know 7-5