Question

The term accounts payable can also refer to the person or staff that processes vendor invoices and pays the company's bills. That's why a supplier who hasn't received payment from a customer will phone and ask to speak with "accounts payable." If you are the supplier and need to record the journal entries, what accounts would you use and would you debit or credit the amounts?

Answer 1

First of all it is important to understand what accounts payable means, it means that some goods, items etc. have been bought by the company on credit and will be paid later on.

Eg. Raw Material purchased the journal entry will be

Stock A/c Dr. $xxx

To Accounts Payable A/c $xxx

Now Accounts Payable can also refer to a person or a supplier or a vendor from whom things have been purchased. In that scenario the amount will be reflected in that particular person account rather than appearing in the accounts payable account.

Eg. Stocks were purchased from John (vendor)

Then Journal entry will be

Stock A/c Dr. $xxx

To John A/c $xxx

This means that John will be shown as creditor in our books and when the payments are made his account will be debited to clear the account. Payment entry will be

John A/c Dr $xxx

To Bank A/c $xxx

Vendors ask specifically for the accounts payable department as there are specific departments in large corporation to handle the vendors and process their payments on time.