What is the Purchases Journal?

Is it used to record purchases on credit of
an entity so what is the purchases journal? I’m Thomas Harwood and Welcome to The Accounting
Student, where we create free and short videos so that you can learn about accounting. Today’s video is looking at what is the
purchases journal. Most businesses have a large quantity of purchases
on credit. To remind you a credit purchase is where goods
or services were bought from a supplier and the business and supplier agree for the payment
to be paid at a future date. After a credit purchase has been made, an
invoice is usually sent from the supplier demanding payment by a certain date. A purchase invoice is a source document, which
provides a record of the purchase transaction. And it can look like this. The invoice totals are entered into a book
of original entry. In this example, a purchase invoice would be entered in the purchases
journal. The purchases journal can also be referred
to as the purchases day book. And it will usually look something like this…. Starting from the first column, is the date
of the transaction i.e. purchase is entered here. Then in the next column is the name
of the supplier, which the purchase was made from. The third column will have the invoice number
and the fourth column will be the folio which provides a quick reference of where the other
account can be found in the accounting system. For example, the general ledger is GL, the
sales ledger is SL and the purchases ledger is PL. The final column is the amount of the transaction. Lets add information of weekly purchases. So each purchase in the purchases journal
will be posted separately in each individual supplier or creditor account on the credit
side, which are held in the purchases ledger. And to complete the double entry the total
of the purchases journal, which is £435, will be entered on the debit side of the purchases
account in the general ledger. So that was the explanation of the purchases
journal. If you enjoyed it, press the like button. If you have a question you want answered leave
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