Payments · Level: Basics
Journal entry: Paying a supplier invoice
We pay an open invoice by transfer. The payable is cleared and the bank balance falls.
Worked example
We pay the invoice from Taylor & Sons for £21,300.00 by bank transfer.
Correct journal entry
Trade payables £21,300.00 / Bank £21,300.00
Debit
Trade payables£21,300.00
Credit
Bank£21,300.00
Why?
- Trade payables: liability decreases → debit
- Bank: asset decreases → credit
Typical mistake
Booking Purchases or Input VAT again; both were recorded with the invoice.
Your turn
Three problems on exactly this case, with different numbers. Amounts work with or without separators, e.g. 2,400.00 or 2400.
Transaction
Bank statement: £5,940.00 paid to Brown Supplies plc for their invoice.
Debit
Assets up · expenses · liabilities down
Total debit£0.00
Credit
Liabilities up · income · assets down
Total credit£0.00
Frequently asked questions
What is the journal entry for paying a supplier invoice?
Example: Trade payables £21,300.00 / Bank £21,300.00.
How do I recognise this case?
We pay an open invoice by transfer. The payable is cleared and the bank balance falls.
What is the typical mistake?
Booking Purchases or Input VAT again; both were recorded with the invoice.