A purchases journal is a subsidiary-level journal in which is stored information about purchasing transactions. This journal is most commonly found in a manual accounting system, where it is necessary to keep high-volume purchasing transactions from overwhelming the general ledger.
All types of purchases made on credit are recorded in the purchases journal, including the following:
- Office supplies
- Goods acquired for resale
Any transaction entered into the purchases journal involves a credit to the accounts payable account and a debit to the expense or asset account to which a purchase relates. For example, the debit relating to a purchase of office supplies would be to the supplies expense account. The journal also includes the recordation date, the name of the supplier being paid, a source document reference, and the invoice number. Optional additions to this basic set of information are the payment due date and authorizing purchase order number.
Periodically, and no later than the end of each reporting period, the information in the purchases journal is summarized and posted to the general ledger. This means that the purchases stated in the general ledger are only at the most aggregated level. If a person were researching the details of a purchase, it would be necessary to go back to the purchases journal to locate a reference to the source document.