do you sometimes pay for your merchandise long after it was delivered to you
well then you should watch this video how to record purchasing merchandise on account
if you have any questions about this topic you can leave them in the comments section below and
i'll do my best to help you and of course if you feel the video helped you i hope you will click
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you purchase merchandise on account it means you pay vendors for the merchandise after you
receive it the accounts payable reports will show how much you owe the vendor
for the merchandise until the vendor is paid inventory quantity will increase the same way
it will increase if you paid cash for the merchandise because you still physically have
it with you so what happens when you purchase inventory on account well we know the inventory
asset must increase because you physically have more inventory but instead of paying cash
accounts payable will increase and accounts payable increases because that's the account that
represents how much money you owe the vendors for merchandise that you bought and will pay for later
for example let's imagine on january 4th of 2020 we received 50 apples from addie's orchard
with bill number eight four seven two she sent a bill because we received the apples without
paying for them can you guess the bill amount well we know we purchase apples at ten dollars each
and we're buying fifty of them so the bill amount is five hundred so if we received five hundred
dollars of merchandise that we did not yet pay for what would happen in the trial balance
well the inventory asset would increase by five hundred dollars because we have five hundred
dollars more of merchandise and accounts payable would show up for the first time on the trial
balance in the amount of five hundred dollars so let's go ahead and record this bill now
in the top left we click new go to the column of vendors and click bill
now the date if i'm not mistaken was january 4th and we bought this from addie's orchard
and the bill number is 8472 for all you star trek fans out there now remember you have to
scroll down and close up the category details and click the triangle next to item details then
click directly under the products and services click the pull down arrow and choose apples
quickbooks remembers we purchased them for ten dollars each and we are buying
50 of them so that means the bill amount is 500 that's all you have to do if you receive the
items with a bill then click save and close and you can see the results on the trial balance are
exactly as what we expected accounts payable is 500 and inventory asset is 500. we can also look
at the report that we set up in an earlier video transaction list by vendor by clicking reports
custom reports transaction list by vendor and you can see all of the transactions for each vendor
here's addie this is check number two and this is bill number eight four seven two now
please note there are other reports that help you manage your vendor relationship the unpaid bills
report will show the remaining balance let's set that up reports go to standard reports scroll down
slowly to the section of who you owe money to what you owe and the most important report in the what
you owe section in the standard reports would be unpaid bills and notice it already says all dates
and we only owe addy's orchard for that one bill but let's go ahead and click save customization
and click save so that we can refer back to this when buying merchandise on account
and knowing what we owe now the last point is if you need to learn more about vendors balance you
can study about vendors and payables right here on this website but the last thing i want to show you
is if you click reports and click custom reports and go back to the inventory valuation detail
you can see that the quantity of apples has increased by 50 and the money amount of apples has
increased to 1500 because of this bill the bill we received with the merchandise on january 4th