Should i debit inventory or purchases?

Jun 11, 2021
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Hello! I'm starting a small business selling hand crafted candles, aromatherapy products etc. and i'm hoping to do the bookkeeping myself since it's just going to be small and web based.

Quite confused as to how i should record my purchases. E.g. if i purchase some raw materials to make candles, would it be a debit to inventory in balance sheet or purchases in P&L?

Using a simple example, if i buy $100 worth of wax to make candles, could i do something like:

Dr Inventory (raw materials) $100
Cr Cash $100

then i make a sale of 1 candle, which uses $10 worth of wax to produce:

Dr Cost of goods sold $10
Cr Inventory (raw materials) $10

Or do i debit purchases in P&L?

Thank you in advance for your help :)

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