Should i debit inventory or purchases?

Joined
Jun 11, 2021
Messages
1
Reaction score
0
Country
Singapore
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 :)
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Members online

No members online now.

Forum statistics

Threads
11,783
Messages
27,852
Members
21,798
Latest member
itesmeni

Latest Threads

Top