when processing claims that we receive from suppliers what do i debit and credit.?

Question

At the end of the process I have credited inventory and debited accounts payable. All of the other debits and credits are a wash. Shouldn't i have an account that tells our total claims amount. Wouldn't this be an asset account?

when i enter the claim into the system i debit mill claims due and credit claims in process. i also cr inventory and db cost of claims.

Answer 1

When you say process claims, is that the same as processing payments to suppliers?

When you received goods on credit from your suppliers, you'd
Dr Purchases
Cr A/cs payable

When you make payment to your suppliers, you'd
Dr A/cs payable
Cr Cash at bank

At no point would you have credited inventory. If you've paid your suppliers in full, the a/cs payable would become zero, leaving you with the purchases balance which would find its way into your inventory balance, which is an asset account.

Answer 2

it doesn't sound like you should have credited inventory. this would be a profit.