What is the journal for recording stock purchased?
Dr. Purchase xxx
Cr. Cash xxx
Dr. Stock xxx
Cr.? Xxx
Please tell me what?? Should be.
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What is the journal for recording stock purchased?
Dr. Purchase xxx
Cr. Cash xxx
Dr. Stock xxx
Cr.? Xxx
Please tell me what?? Should be.
Dr. Investment
Cr. Cash or bank
Hi, this is manufacturing stocks, not those in stock market. So the credit should be??Quote:
Originally Posted by hamzashakaa
OK I see. It will depend on the inventory system you use. If you use periodic inventory system you should record the following entry:
Dr. Purchases
Cr. Cash or bank
If you use perpetual inventory system the entry should be as follows:
Dr. Inventory (Stock)
Cr. Cash or bank
If it is periodic inventory system, when the inventory will be recorded? And what the entry should be?Quote:
Originally Posted by hamzashakaa
If it is a periodic inventory system, then the inventory will be recorded when you perform the physical count at the end of the year or the month according to the Company's policy.
Lets see the following simple scenario:
Suppose you perform the count at the end of each month. Suppose on January 11 you purchased 200 units for @$2 each and on January 20 you purchased 300 units @$2 each. On January 25 you sold 100 units for @$3 each. The entries will be as follows:
January 11
1- Dr. Purchases 400
Cr. Accounts Payable 400
January 20
2- Dr. Purchases 600
Cr. Accounts payable 600
January 25
3- Dr. Accounts receivable 300
Cr. Sales 300
Now at the end of January when you perform the physical count you will have 400 units on hand (200+300-100) @ $2 each. Now you should close the purchases account to two accounts (The ending inventory and the cost of goods sold) because your purcashes are either sold or on hand.
Dr. Inventory (400*2) 800
Dr. Cost of sales (100*2) 200
Cr. Purchases (200+300)*2 1000
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