{"id":5236,"date":"2015-01-21T07:27:39","date_gmt":"2015-01-21T05:27:39","guid":{"rendered":"http:\/\/www.officetodo.com\/public\/?p=5236"},"modified":"2015-01-18T07:28:19","modified_gmt":"2015-01-18T05:28:19","slug":"paying-for-inventories","status":"publish","type":"post","link":"http:\/\/www.officetodo.com\/public\/paying-for-inventories\/","title":{"rendered":"Paying for inventories"},"content":{"rendered":"

Buying inventory items, i.e. goods to be resold, materials to be produced and manufactored into sellable goods is something businesses do every day. They buy what\u2019s needed to keep the business running and keep track on stock in hand. The accounting entries one normally does for when acquiring inventory items is as follows (note here that we have ignored any tax effects):\u00a0<\/p>\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/tr>\n<\/tbody>\n
#<\/strong><\/td>\n<\/td>\nDebit-Credit<\/strong><\/td>\n<\/td>\nAccount name<\/strong><\/td>\n<\/td>\nAmount\u00a0<\/strong><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
1<\/em><\/td>\n<\/td>\nDebit<\/em><\/td>\n<\/td>\nInventory<\/em><\/td>\n<\/td>\n1,000<\/em><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
\u00a0<\/em><\/td>\n<\/td>\nCredit<\/em><\/td>\n<\/td>\nPayable to suppliers<\/em><\/td>\n<\/td>\n1,000<\/em><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Not so regularly it may happen that we acquire inventories and pay on spot. It\u2019s important to show in this case the account wihtin cash and cash equivalents grouping we paid the amount from:<\/p>\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/tr>\n<\/tbody>\n
#<\/strong><\/td>\n<\/td>\nDebit-Credit<\/strong><\/td>\n<\/td>\nAccount name<\/strong><\/td>\n<\/td>\nAmount\u00a0<\/strong><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
1<\/em><\/td>\n<\/td>\nDebit<\/em><\/td>\n<\/td>\nInventory<\/em><\/td>\n<\/td>\n1,000<\/em><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
\u00a0<\/em><\/td>\n<\/td>\nCredit<\/em><\/td>\n<\/td>\nCash account<\/em><\/td>\n<\/td>\n1,000<\/em><\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Paying for inventory is generating for the company a cash outflow and what you\u2019re getting out of it, is something to be sold at a later date.\u00a0It\u2019s important to note that if you\u2019re paying say 100 for one item, you ought to be getting more for it when you sell it to cover for your expenses and earn profits.<\/strong>\u00a0Thus it\u2019s important to keep track on cost per item within your inventory ledger as well.<\/p>\n","protected":false},"excerpt":{"rendered":"

Buying inventory items, i.e. goods to be resold, materials to be produced and manufactored into sellable goods is something businesses do every day. They buy what\u2019s needed to keep the business running and keep track on stock in hand. The accounting entries one normally does for when acquiring inventory items is as follows (note here […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[80],"tags":[],"class_list":["post-5236","post","type-post","status-publish","format-standard","hentry","category-2-10-purchases-and-payables"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t