Recording a business inventory transaction is a two-step process. The first step is to record the information found on the invoice in the general journal. The general journal is one of the controlling ledgers for your business. If you use a perpetual accounting system, you record each business financial transaction in the general journal daily. The second step is to post the information from the general journal in the inventory and accounts payable general ledgers.

General Journal Entry

Use your inventory invoice to confirm that the information was correctly entered into the general journal. The entry should include the date of purchase, the accounts affected by the transaction, the purchase amount and a brief description of the transaction. For example, say you purchased $20,000 of merchandise on credit on June 1, 2012 and recorded the purchase on page 80 in your general journal. The two accounts that are affected by the transaction are inventory and accounts payable.

Inventory General Ledger Entry

Go to the most recently used page in your inventory general ledger account. Inventory is an asset and asset increases are recorded in the debit column. A decrease in your inventory is recorded in the credit column. Start by entering the purchase date in the date column. Enter a description of the inventory in the Transaction Description column. Enter the amount in the debit column. Add that amount to the current balance and enter the new amount in the Balance column.

Inventory Entry Example

You would enter the date as June 1, 2012, describe what you purchased in the Transaction Description column and enter the debit amount as $20,000. If your inventory balance is $50,000, add the $20,000 to that amount and record $70,000 as your new balance.

Accounts Payable Ledger Entry

Go to the most recently used page in your accounts payable general ledger account. Accounts payable is a liability account. Any increase is recorded in the credit column and any decrease is recorded in the debit column. Enter the date you purchased the inventory. Enter the name of the person or company who sold you the inventory in the Transaction Description Column. Enter the amount in the credit column. Add that to the amount shown in the Balance column to get the new balance and record it in that column.

Accounts Payable Entry Example

Enter June 1, 2012 in the Date column, ABC Supply in the Transaction Description column and $20,000 in the credit column. If the amount in the Balance column is $5,000, add the $20,000 to the $5,000 and enter $25,000 as the new balance amount.