Question

On March 1, the firm bought $15,000 of inventory on account.

On May 1, the firm paid inventory purchased above.

Make journal entries for both.

Answer 1

the entry for the purchase of inventory costing $15000

date	accounts title	debi	credit
march 01	inventory	$15000
	accounts payable		$15000

On March 1, the firm bought $15,000 of inventory on account. as the payment is done in may it is a credit purchase.inventory is an asset account which gets debited when it increases and as the payment is done in later ,a liability will arises.accounts payable is a liability account which gets credited when it increases

the entry for payment of inventory purchased on march 01.

date	accounts title	debi	credit
may 01	accounts payable	$15000
	cash		$15000

on may 01, the firm paid the inventory purchased on march 01 by cash.as the payment is done, the liability will decreases.accounts payable is liability account which gets debited when it decreases.the payment is done by cash. cash is an asset account which gets credited when it decreases.