Accounts Payable Journal Entry: Examples, Debit and Credit

An accounts payable journal entry is how you record a bill you owe a vendor in your books. Every time a supplier delivers goods or services on credit, you make one entry to recognize the cost and the obligation, and a second entry later when you pay. Get these entries right and your payables balance, your expenses, and your cash all stay accurate. Get them wrong and your month-end close turns into a hunt for differences that should never have existed.

This guide shows the two core accounts payable journal entries with worked dollar examples, explains why accounts payable is a credit, and walks through the trickier entries you will meet in real US accounting: accruals, credit memos, early payment discounts, and write-offs. It uses standard double-entry bookkeeping under US GAAP, the same logic QuickBooks, Xero, and NetSuite follow behind the scenes.

What is an accounts payable journal entry?

An accounts payable journal entry is a double-entry bookkeeping record that captures a short-term debt your business owes a supplier for goods or services bought on credit. Accounts payable is a liability account on the balance sheet, so it carries a credit balance. Each entry has two sides that must equal: a debit and a credit. When you receive a bill, you credit accounts payable to show the new obligation and debit an expense or asset account to show what you received.

Because the totals on both sides always match, the entries keep the accounting equation in balance. That is the whole point of recording payables this way rather than waiting until you cut the check. Under accrual accounting, you recognize the expense when you incur it, not when cash leaves the bank, which is why the invoice entry comes first and the payment entry comes later.

Is accounts payable a debit or credit?

Accounts payable is a credit. It is a liability account, so it increases with a credit and decreases with a debit. When you record a new vendor bill, you credit accounts payable to raise the balance you owe. When you pay that bill, you debit accounts payable to reduce it back down. The account normally carries a credit balance equal to the total of all unpaid invoices on your books.

A quick way to remember it: liabilities and equity sit on the credit side, assets and expenses on the debit side. Cash is an asset, so paying a bill credits cash (an asset going down) and debits accounts payable (a liability going down) at the same time. If you ever see a debit balance in accounts payable for a vendor, that usually signals an overpayment, a duplicate payment, or an unapplied credit, and it is worth investigating.

The two core accounts payable journal entries

Almost every payable runs through the same two-step cycle: record the invoice, then record the payment. Here is each one with a worked example.

Recording the invoice

When the bill arrives, you recognize the expense or asset and the liability at the same time. Say you receive a $4,000 invoice from a marketing agency on net 30 terms.

Debit Marketing Expense $4,000. Credit Accounts Payable $4,000.

The expense hits your income statement now, in the period you incurred it, and accounts payable on the balance sheet rises by $4,000. If the purchase were inventory or equipment rather than a service, you would debit the asset account (Inventory or Fixed Assets) instead of an expense account, but the credit to accounts payable stays the same.

Paying the invoice

When you pay the bill 30 days later, you clear the liability and reduce cash.

Debit Accounts Payable $4,000. Credit Cash $4,000.

Notice the expense is not touched at payment time. You already recorded it when the invoice came in. Payment is purely a balance sheet movement: one liability down, one asset down. After this entry, the vendor balance returns to zero and nothing remains in accounts payable for that invoice.

Accounts payable journal entry examples

The table below summarizes the most common accounts payable entries you will record, with the account debited and credited in each case.

Accrual journal entries and accounts payable

Sometimes you have received goods or services but the invoice has not arrived by your close date. To report the expense in the right period, you record an accrual. Suppose your packaging supplier delivered $8,000 of materials on June 28 but will not bill you until July.

At June 30 you accrue it: Debit Packaging Expense $8,000, Credit Accrued Liabilities $8,000. This is an accrued expense, not yet a true payable, because no invoice exists. When the invoice lands in July, you reverse the accrual and move the amount into accounts payable: Debit Accrued Liabilities $8,000, Credit Accounts Payable $8,000. Many teams set the original accrual as a reversing entry so the swap happens automatically on the first day of the new period. Accruals are a routine part of the accounts payable month-end close, where you capture received-not-invoiced costs before locking the books.

Accounts payable vs accrued expenses

The difference between accounts payable and accrued expenses is whether an invoice exists. Accounts payable is a specific amount you owe a supplier who has already billed you, with a known due date and terms. Accrued expenses are estimated costs you have incurred but not yet been invoiced for, such as utilities used but not billed or wages earned but not yet paid. Both are short-term liabilities, but they live in different accounts and serve different purposes at close.

In practice, an accrued expense often becomes an account payable. You estimate and accrue the cost at period end, then once the vendor invoice arrives with the exact figure, you reverse the accrual and book the real payable. Keeping the two separate gives a cleaner audit trail and makes it obvious which obligations are confirmed by an invoice and which are still estimates.

Other common accounts payable journal entries

Beyond the basic invoice and payment, four entries come up often enough that every AP team should know them cold.

Credit memo from a vendor

When a supplier issues a credit memo, for a return, an overbilling, or a damaged shipment, you reduce what you owe. Debit Accounts Payable and credit the original expense or inventory account for the credit amount. For a $600 credit on returned goods: Debit Accounts Payable $600, Credit Inventory $600. The credit then offsets future invoices from that vendor or reduces your next payment. Recording these promptly prevents the unclaimed credits that surface during vendor statement reconciliation.

Early payment discount

Terms like 2/10 net 30 let you take a 2 percent discount if you pay within 10 days. On a $10,000 invoice paid early, you owe $9,800. Debit Accounts Payable $10,000, Credit Cash $9,800, Credit Purchase Discounts $200. The full liability clears, you part with less cash, and the $200 saved lands in a contra-expense or other income account. Capturing these discounts is one of the clearest returns on a faster payables process.

Writing off a payable

If a payable has sat on your books long after it should have been settled, for example a vendor that closed or a duplicate that was never real, you may write it off after confirming it is not owed. Debit Accounts Payable and credit Other Income for the amount removed. Document why before you do this, because a write-off that hides a genuine duplicate payment masks a real problem. Reviewing your accounts payable aging report is the usual way these stale balances get flagged.

Correcting or reversing an entry

When you post an entry to the wrong account or the wrong amount, you fix it with a reversing or adjusting entry rather than deleting the original, which preserves the audit trail. Reverse the incorrect entry with equal and opposite debits and credits, then post the correct one. This matters most when a bill is entered twice; clearing the duplicate cleanly keeps your payables accurate and your controls intact. Duplicate entries are a leading cause of duplicate invoice payments, so catching them before payment is far cheaper than recovering cash afterward.

How automation records accounts payable journal entries

Modern AP automation does the mechanical part of these entries for you. It captures the invoice with AI, reads the vendor, amount, and line items, codes the cost to the right general ledger accounts based on rules you set, and posts the accounts payable journal entry straight into QuickBooks, Xero, NetSuite, or Sage once the invoice is approved. When you schedule the payment, it records the matching debit to accounts payable and credit to cash automatically.

What automation does not do is replace your judgment. You still define your chart of accounts, set the coding rules, and review exceptions. The software keeps the entries consistent, eliminates the transposition errors that come with manual keying, and gives you a clean subledger that ties to the general ledger at close. If your team still types every entry by hand, the time and error savings are usually the first thing they notice. You can see how this fits a full workflow in our guide to the accounts payable process, or compare options on our best AP automation software page.

Frequently asked questions

What is the journal entry for accounts payable?

The journal entry for accounts payable has two steps. When you receive a vendor invoice, you debit an expense or asset account and credit accounts payable for the amount owed. When you pay the invoice, you debit accounts payable and credit cash. The first entry records the obligation, and the second clears it once you pay.

Is accounts payable a debit or credit?

Accounts payable is a credit. It is a liability account, so it increases with a credit when you record a new bill and decreases with a debit when you pay that bill. The account normally carries a credit balance equal to the total of all unpaid invoices. A debit balance usually signals an overpayment or an unapplied vendor credit.

What is the journal entry when you pay accounts payable?

When you pay accounts payable, you debit accounts payable and credit cash for the payment amount. This clears the liability you recorded earlier and reduces your cash balance. The expense is not touched at payment because you already recognized it when the invoice was received under accrual accounting. After the entry, the vendor balance returns to zero.

What is the difference between accounts payable and accrued expenses?

The difference is whether an invoice exists. Accounts payable is a confirmed amount you owe a supplier who has already billed you, with a known due date. Accrued expenses are costs you have incurred but not yet been invoiced for, such as utilities used but not billed. Both are short-term liabilities, but accruals are estimates that later become payables once the invoice arrives.

How do you record an accounts payable journal entry?

To record an accounts payable journal entry, identify the expense or asset you received and the vendor you owe. Debit the expense or asset account and credit accounts payable for the invoice total. Make sure the debit and credit are equal so the entry balances. When you pay, post a second entry debiting accounts payable and crediting cash to clear the liability.

What is the journal entry for a credit memo in accounts payable?

When a vendor issues a credit memo, you debit accounts payable and credit the original expense or inventory account for the credit amount. This reduces what you owe the supplier. The credit then offsets a future invoice or lowers your next payment. Recording credit memos promptly prevents unclaimed credits from building up and surfacing later during reconciliation.