JE-13 Mar 2026Manualposted
Receive the stock and enter the bill.
| Account | Dimensions | Debit | Credit |
|---|---|---|---|
| 1200 Inventory | 18,000 US Dollar | ||
| 2000 Accounts payable | 18,000 US Dollar | ||
| Totals | 18,000 US Dollar | 18,000 US Dollar | |
Balanced.
Journal entry for an inventory purchase
When inventory is bought on credit under a perpetual system, debit Inventory and credit Accounts payable. If an early-payment discount is taken, debit Accounts payable for the full bill, credit Cash for what is paid and credit Inventory for the discount.
- Bill
- $18,000
- Discount taken
- $360
- Paid
- $17,640
- Entity
- Illustrative company
- Basis
- Accrual
- Currency
- USD
- Period
- March 2026
The worked example
A retailer receives $18,000 of stock on March 3, 2026 on 2/10 net 30 terms and pays by March 13, 2026, taking the $360 discount and paying $17,640.
Transaction · March 3, 2026
Transaction · March 13, 2026
JE-213 Mar 2026Manualposted
Pay inside the discount window.
Journal entry JE-2, 3 lines Account Dimensions Debit Credit 2000 Accounts payable 18,000 US Dollar 1000 Cash 17,640 US Dollar 1200 Inventory 360 US Dollar Totals 18,000 US Dollar 18,000 US Dollar Balanced.
What the entries do to the accounts
Every entry above posted to the ledger, starting from zero balances: the net debit or credit each account is left with. Debits equal credits, so the books still balance.
| Account | Debit | Credit |
|---|---|---|
| 1000 Cash | 17,640 US Dollar | |
| 1200 Inventory | 17,640 US Dollar | |
| Totals | 17,640 US Dollar | 17,640 US Dollar |
One account nets to zero across the entries and is not shown.
Why it is booked this way
Inventory is an asset until it is sold. Buying it swaps a liability to the supplier for goods on the shelf; the cost reaches the P&L only as cost of goods sold, when each unit ships.
A discount for paying early means the goods cost less than the invoice said. Crediting inventory records that lower cost.
Common mistakes
- Expensing inventory when it is bought rather than when it is sold.
- Recording the discount as other income under a perpetual system, which leaves inventory overstated.
Questions
- Where does the discount go?
- Under a perpetual system the discount reduces the cost of the inventory, so it is credited to Inventory. Under a periodic system it is credited to a Purchase discounts account that reduces purchases.
- What does 2/10 net 30 mean?
- 2/10 net 30 means 2% off if paid within 10 days, otherwise the full amount in 30. Skipping the discount is the same as borrowing for 20 days at a high annualized rate.
Terms on this page
Work with this entry
The tool that computes the schedule, the concept behind it, the entries that come next and the components that render them.
- Payment terms & due dates2/10 net 30 is borrowing at 37% a year. This tells you whether to take the discount. Put your own figures in and get the schedule behind this entry.Tool
- Accounts payable, explained for foundersAccounts payable is approved vendor bills not yet paid. Booking them on arrival puts each cost in the right month and shows what cash is spoken for.Doc
- Two-way match vs three-way matchA two-way match checks a vendor invoice against its purchase order; a three-way match adds the goods receipt, so the company pays only for what it ordered and actually received.Compare
- Journal entry for a sale on accountFor a sale on credit, debit Accounts receivable and credit Revenue for the price; under a perpetual inventory system also debit Cost of goods sold and credit Inventory for what the goods cost. When the customer pays, debit Cash and credit Accounts receivable.Entry
- Journal entry for accounts payableWhen an approved vendor bill is entered, debit the expense or asset it bought and credit Accounts payable. When it is paid, debit Accounts payable and credit Cash.Entry
- Journal entry for an inventory write-downWhen inventory's net realizable value falls below its cost, debit an inventory write-down expense (often within cost of goods sold) and credit Inventory for the difference.Entry
- ThreeWayMatchLine-level variances, not header totals.Component
- JournalEntryDebit and credit as two columns. No signed-column variant.Component
An illustrative company, not anyone’s real books. Every figure on this page is computed from the inputs in the example and posted by the same functions as the journal entry balancer. General information for US companies under US GAAP, not accounting or tax advice.