Purchased Merchandise On Account & For Cash

Purchased Merchandise For Cash / Bank And On Account / Credit Journal Entry

When we purchased Inventory or Merchandise on account or credit, then we say that it is a Credit Purchases in Accounting. For Example, when goods or merchandise worth Rs. 1000 purchased from the supplier (Mr. A) on account / credit, then for the company it is a Credit Purchases Transaction and it is liable to pay to the Accounts Payable / Supplier within the specified time set during the purchase agreement.

Purchased Merchandise On Account Journal Entry

The company records the following Entry in the Purchases Journal as shown below:

                               Purchases / Merchandise a/c  10000

                                                                              Mr. A  10000

  (Purchased Merchandise On Account)

Purchased Merchandise For Cash / Bank

On the other hand, when we purchased merchandise or inventory for cash or Bank from vendor or supplier of goods, then it is called purchased merchandise for cash. The journal entry would be recorded as shown below:

                                              Purchases / Merchandise a/c   XXX

                                                                                          Cash a/c  XXX

                                                 (Purchased Merchandise For Cash)