Bill Received Journal Entry

A bill from a supplier is an invoice for merchandise or services that a company has received. The bill will list the items purchased, the quantity of each item, the unit price, and the total amount due. It is important to review bills from suppliers carefully to ensure that all charges are accurate.

If there are any discrepancies, it is important to contact the supplier to resolve the issue. Bills from suppliers can be paid by check or credit card. Many companies choose to set up automatic payments to avoid late fees and interest charges.

When a company orders goods or services from a supplier, it usually receives a bill shortly afterward. This bill will list the items that have been supplied, along with the prices charged. The company then has a set period of time to pay the bill, known as the payment terms. If the bill is not paid within this period, the supplier may charge interest or late fees.

In some cases, the supplier may even refuse to provide further goods or services until the outstanding bill is paid. As a result, it is important for companies to keep track of their bills and make sure that they are paid on time. By doing so, they can avoid incurring additional charges and maintain a good relationship with their suppliers.

Journal Entry for Bill Received

Bill or Invoice is the demand of payment that a supplier issues to the customers. It usually issues after the delivery of goods or services. The company needs to record the accounts payable which represent the amount owed to the supplier.

However, bill or invoice is not the factors that force the company to recognize the accounts payable. It is just a piece of paper that demand payment, but the company will not have any obligation to settle with the supplier if the goods/service is not yet received.

The company requires to make a recording only if the bill arrives with/after goods or service is delivered.

The journal entry is debiting expenses/assets and credit accounts payable.

The journal entry will increase the expense on the income statement or the assets on balance sheet. The company is also required to record the accounts payable on balance sheet.

Example

Company ABC purchased the goods from the supplier cost $ 40,000. The supplier has delivered 50% of the total purchase, but it issued a bill of $ 40,000 to ABC. Please prepare a journal entry for the bill received.

ABC has received the goods only 50% which equals $ 20,000. However, the supplier has issued a bill for the whole amount which is $ 40,000.

ABC records are based on the actual goods received, not the bill received. It has to record the goods receive only $ 20,000 and accounts payable for the same amount.

The journal entry is debiting inventory $ 20,000 and credit accounts payable $ 20,000.