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Accounting Crash Course – Small Business Accounting Training – Purchases Journal and Purchases Ledger

Accounting Crash Course: Purchases Journal and Purchases Ledger

After understanding how sales journal and sales ledger work, the purchases journal and purchases ledger is a simple extension of the same concepts. Yes you are right, purchases journal does look like sales journal and it also works on the same principles as well. Following is an excerpt from the purchases journal:

Purchases journal excerpt

It’s quite similar to the sales journal with the difference that only credit purchases are recorded in this journal and the entries from this journal go to the purchases ledger in the personal accounts of our suppliers. Here are some accounts from the purchases ledger.

Purchases ledger for Anthony

Purchases ledger for Sylvia

Purchases ledger for Jacobs 1

Any credit purchase of inventory is first recorded in the purchases journal and then the relevant account of the supplier is credited with the relevant amount. At the end of the period, the purchases account in the general ledger is debited with the total purchases for the period. Our double entry system is still valid as every credit has a debit and in this case the total is debited in one purchase account.

In the next section of our small business accounting crash course we review Sales Return and Purchase Return Journals as well and then see all four journals (i.e. purchases, sales, purchases return and sales return) and two ledgers (purchases and sales) at work in one example.

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