What is the journal entry for recording the purchase of inventory on credit?

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Q: What is the journal entry for recording the purchase of inventory on credit?

Solution: The correct entry is to debit Inventory and credit Accounts Payable to reflect the purchase of inventory on credit.

Steps: 5

Step 1: Identify the accounts involved in the transaction. In this case, we have 'Inventory' and 'Accounts Payable'.
Step 2: Determine the action for each account. Since we are purchasing inventory, we will increase the Inventory account.
Step 3: Record the increase in Inventory by debiting it. This means we add the amount of the inventory purchase to the Inventory account.
Step 4: Since the purchase is on credit, we will also increase our liability. This is done by crediting the Accounts Payable account.
Step 5: Write the journal entry. It will look like this: Debit Inventory (for the amount purchased) and Credit Accounts Payable (for the same amount).