When a company receives an invoice from a vendor for goods or services received on credit, it needs to record the liability and recognize the expense. Here's how to record such a transaction in the journal entries.
Scenario:
A company receives an invoice from a vendor for ₹50,000 for office supplies.
Journal Entry for Invoice Receipt from Vendor:
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|---|---|---|
| 2024-06-01 | Office Supplies Expense A/c | 50,000 | |
| To Accounts Payable A/c | 50,000 | ||
| (Being invoice received from vendor for office supplies) |
Explanation:
- Office Supplies Expense A/c is debited to record the expense for the office supplies.
- Accounts Payable A/c is credited to reflect the liability to the vendor.
Example with Different Details
Scenario: A company receives an invoice from a vendor for ₹75,000 for consulting services.
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|---|---|---|
| 2024-06-01 | Consulting Expense A/c | 75,000 | |
| To Accounts Payable A/c | 75,000 | ||
| (Being invoice received from vendor for consulting services) |
Additional Scenarios:
Invoice for Inventory Purchase:
Scenario: A company receives an invoice from a vendor for ₹100,000 for inventory purchased.
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|---|---|---|
| 2024-06-01 | Inventory A/c | 100,000 | |
| To Accounts Payable A/c | 100,000 | ||
| (Being invoice received from vendor for inventory) |
Invoice for Utilities:
Scenario: A company receives an invoice from a vendor for ₹10,000 for utilities.
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|---|---|---|
| 2024-06-01 | Utilities Expense A/c | 10,000 | |
| To Accounts Payable A/c | 10,000 | ||
| (Being invoice received from vendor for utilities) |
Combined Example with Partial Payment:
Scenario: A company receives an invoice from a vendor for ₹120,000 for equipment. The company makes a partial payment of ₹50,000 and the remaining ₹70,000 is payable in the future.
Journal Entry for Receiving Invoice:
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|---|---|---|
| 2024-06-01 | Equipment A/c | 120,000 | |
| To Accounts Payable A/c | 120,000 | ||
| (Being invoice received from vendor for equipment) |
Journal Entry for Partial Payment:
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|---|---|---|
| 2024-06-05 | Accounts Payable A/c | 50,000 | |
| To Cash/Bank A/c | 50,000 | ||
| (Being partial payment made to vendor) |
Summary:
Recording the receipt of an invoice from a vendor ensures that expenses and liabilities are accurately reflected in the company's financial records. This helps in tracking payable amounts and managing cash flow effectively.
