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Example of a Bookkeeping Entry When Buying From a Supplier on Credit

Bookkeeping Transaction for Accounts Payable

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A small business often buys from a number of vendors or suppliers using store credit or credit based on their relationship with the supplier. Accounts payable, on the Chart of Accounts and balance sheet, is a short-term liability account. This account shows the total amount of supplier credit the business owes at any point in time.

Accounts payable are current liabilities that will be paid off within one year. They are short-term debt for items such as office supplies. Once they are used by the business, they are shown as an expense.

Here are the bookkeeping transactions you use for accounts payable. You make this entry in the cash disbursements journal, the cash journal, and the expense journal. The scenario is that a company buys $250 in office supplies and uses its store credit to pay for them. Then, at a later time, the company uses $100 in the office supplies and has to expense it.

Cash Disbursements Journal and Expensing

DebitCredit
Office Supplies$250.00
Accounts Payable$250.00
DebitCredit
Expenses$100.00
Office Supplies$100.00

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