10 Examples of Various Inventory Journal Entries

Here are 10 examples of various inventory journal entries:

 

1. Purchase of Inventory on Credit:

   • Debit: Inventory
   • Credit: Accounts Payable

   This entry reflects the purchase of inventory on credit.

2. Purchase of Inventory for Cash:

   • Debit: Inventory
   • Credit: Cash

   This entry reflects the purchase of inventory with cash.

3. Sale of Inventory on Credit:

   • Debit: Accounts Receivable
   • Credit: Sales Revenue
   • Debit: Cost of Goods Sold
   • Credit: Inventory

   This entry records the sale of inventory on credit.

4. Sale of Inventory for Cash:

   • Debit: Cash
   • Credit: Sales Revenue
   • Debit: Cost of Goods Sold
   • Credit: Inventory

   This entry records the sale of inventory for cash.

5. Return of Inventory by Customer (Credit Sale):

   • Debit: Sales Returns and Allowances
   • Credit: Accounts Receivable
   • Debit: Inventory
   • Credit: Cost of Goods Sold

   This entry records the return of inventory by a customer who initially purchased on credit.

6. Return of Inventory by Customer (Cash Sale):

   • Debit: Sales Returns and Allowances
   • Credit: Cash
   • Debit: Inventory
   • Credit: Cost of Goods Sold

   This entry records the return of inventory by a customer who initially purchased for cash.

7. Write-down of Obsolete Inventory:

   • Debit: Loss on Obsolete Inventory
   • Credit: Inventory

   This entry is made to write down the value of obsolete inventory.

8. Adjustment for Damaged Inventory:

   • Debit: Loss on Inventory Write-down
   • Credit: Inventory

   This entry reflects the reduction in the value of inventory due to damage.

9. Freight-In Cost on Inventory Purchase:

   • Debit: Inventory
   • Credit: Cash or Accounts Payable (for the cost of the inventory)
   • Debit: Freight-In Expense
   • Credit: Cash or Accounts Payable (for the cost of freight)

   This entry includes both the cost of the inventory and the freight-in cost.

10. Adjustment for Physical Inventory Count (Overstated):

    • Debit: Inventory
    • Credit: Cost of Goods Sold

    This entry is made when the physical count of inventory is less than the recorded amount, resulting in an overstatement.

 

Remember that the accounts used and the specific amounts may vary based on the company's accounting policies, the nature of transactions, and applicable accounting standards. Always consult with an accountant for guidance tailored to the specific circumstances of your business.

 

 

Thank you.