Entry of the purchases journal with the tax

 Purchasing in commercial establishments is the process of buying goods for the purpose of reselling them and profit from them, but in some other companies in contracting companies, for example, the purchase is made for the purpose of practicing the main activity and not for resale, which is construction, for example, the purchase of iron or other materials related to the activity of construction and contracting.

Entry of proof of purchases

Goods are purchased through the Procurement Department that purchases the goods by making the purchase order and approving it from the owner of the facility, then communicating with the supplier and when the supplier sends the goods, the Purchasing Department makes a receipt for it and receives the invoice for the purchase process and then sends it to the Financial Accounting Department to record it in the books.

Processing purchase restriction

Purchases are debit by nature and purchases are processed according to the system followed in the company, whether it is a periodic or continuous inventory system.

Under the periodic inventory system, purchases are recorded with the tax.

Of those mentioned

From

purchases

 Value added tax on purchases 

       To cash, vendor or bank

Entry of proof of purchase of goods

Continuous inventory system

We will put inventory account instead of purchases and be constraint

Of those mentioned

From

stock

Value added tax on purchases 

To cash, bank or supplier

The supplier's account in the case of buying on credit, i.e. on the account

The value-added tax on purchases is a refundable tax, meaning that it is deducted from the value-added tax on sales and the difference is paid to the tax authority.

Then make a cost entry for the sold goods

From 

cost of goods sold or cost of sales.

       To Stock

That is, the inventory account is locked into the cost of goods sold account

The periodic inventory is used in the absence of stock for the goods, i.e. the goods are sold first, and the inventory of the goods is done at the end of the year to know the cost of the goods at the end of the period and any commodity pricing at the end of the period is evaluated at the market price or cost whichever is less applicable

Continuous inventory

The periodic inventory is used in the event that there is stock, meaning that the establishment does not need to make an inventory of the goods, as it makes an inventory at all time through the cost of the sold goods through which it is possible to know the balance of the end of the period or the balance of the goods in the store at any time