As we all know, a payment is made when we purchase a good or service on a credit or cash basis. In terms of a business, a vendor (supplier/creditor) is a person who sells goods to the company on a cash or credit basis with an agreement to receive the payment within a specified period.

This in turn affects the accounts payables as the vendors are the creditors of the company as well as considered a short-term liability and are recorded under the head of current liabilities in the balance sheet.

Journal entry for payment to vendor

1.

(being goods purchased from the vendor on credit)

2.

(being payment made to the vendor)

Example

XYZ Ltd. purchased goods from a vendor amounting to 60,000 on a credit basis in May and agreed to make the due payment in July. The journal entries in the books of XYZ Ltd. are as follows:

(being goods purchased on credit from the vendor)

(being payment made to the vendor in cash)

Note: In case the company purchases the goods from the vendor directly for cash then only the following entry shall be passed in the books of accounts:

(being goods purchased from the vendor for cash)

Hope this helps.