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First, the Receiving Inspection account is debited and the Inventory A/P Accrual account credited based on quantity received and the purchase order price.

Account	Debit	Credit
Receiving Inspection account @ PO price	XX
Inventory A/P Accrual account @ PO price		XX

Next, the Subinventory and Receiving Inspection accounts are, respectively, debited and credited based on the transaction quantity and standard cost of the received item.

Account	Debit	Credit
Subinventory accounts @ standard cost	XX
Receiving Inspection account @ PO price		XX
Debit/Credit Purchase Price Variance

If your item has material overhead(s), the subinventory entry is debited for the material overhead and the material overhead absorption account(s) is credited.

Account	Debit	Credit
Subinventory accounts	XX
Material Overhead Absorption account		XX

Attention: If the subinventory account is combined with the above entry, the material overhead absorption account adds one additional entry.

See Also

Overview of Receipt Accounting