What is included in the journal entry for a $5,000 inventory purchase with a $1,000 cash payment?

In the scenario of a $5,000 inventory purchase with a $1,000 cash payment, the journal entry must reflect the impact of this transaction accurately on the accounts involved. The purchase of inventory increases an asset, which is recorded as a debit. Since $1,000 is paid in cash, it is a reduction in another asset (cash), which is recorded as a credit. The remaining balance of the inventory purchase, which is $4,000, is financed through accounts payable; therefore, accounts payable, representing a liability, will be credited to reflect this obligation to pay in the future.

Consequently, the correct journal entry would be:

• Debit to Inventory for $5,000 (increasing the asset).
• Credit to Cash for $1,000 (decreasing the asset).
• Credit to Accounts Payable for $4,000 (increasing the liability).

This comprehensive view reveals why crediting accounts payable for $4,000 is appropriate, as it simultaneously acknowledges the total amount owed for the inventory while differentiating between the cash payment and the liability incurred.