Bookkeeping · IKR
Booking a Raw Materials Purchase on Credit with Input VAT (IKR)
Note on number format: bookkeeping in this article follows German practice, so amounts are written the German way. 1.500,00 € means one thousand five hundred euros (in English: €1,500.00). In the German format the period separates thousands and the comma separates decimals.
A manufacturing company needs raw materials to make its products. Buying these raw materials is therefore one of the most common entries of all. In this article you learn how to book a raw materials purchase on credit with input VAT using the German industrial chart of accounts (IKR). Everything here follows German bookkeeping rules (HGB, UStG).
What does “on credit” mean?
“On credit” means that the company receives the goods now but pays for them later. Until it pays, it owes money to the supplier. This debt is booked on the account 4400 Trade payables (in German: Verbindlichkeiten a. LL, where “a. LL” stands for “aus Lieferungen und Leistungen”).
Which accounts do you need?
- 6000 Expenses for raw materials: This is where you book the net value of the raw materials.
- 2600 Input VAT: This is where you book the VAT (Umsatzsteuer) that the supplier charges you.
- 4400 Trade payables: This shows the gross amount you owe the supplier.
Why an expense account and not 2000 Raw materials?
In class, the usual method is consumption-based booking. You assume that the purchased raw materials go straight into production. That is why the purchase goes directly onto the expense account 6000. The inventory account 2000 Raw materials is then only needed at the beginning and end of the year, when changes in stock are recorded.
Example: buying timber on invoice
Holzwerk Brandt GmbH buys oak timber for 8.000,00 € net on credit. The supplier charges 19 % VAT.
- Net amount: 8.000,00 €
- VAT 19 %: 8.000,00 € × 0,19 = 1.520,00 €
- Gross amount: 9.520,00 €
| Debit | Amount | Credit | Amount |
|---|---|---|---|
| 6000 Expenses for raw materials | 8.000,00 € | ||
| 2600 Input VAT | 1.520,00 € | ||
| 4400 Trade payables | 9.520,00 € | ||
| Total | 9.520,00 € | Total | 9.520,00 € |
The journal entry reads: 6000 Expenses for raw materials 8.000,00 € and 2600 Input VAT 1.520,00 € to 4400 Trade payables 9.520,00 €.
Delivery costs: freight and packaging
Often there are extra costs for transport or packaging. You book these delivery costs (Bezugskosten) on a separate sub-account: 6001 Delivery costs. Suppose a haulage company charges 300,00 € net plus 57,00 € VAT for the delivery, 357,00 € in total, also on credit:
| Debit | Amount | Credit | Amount |
|---|---|---|---|
| 6001 Delivery costs | 300,00 € | ||
| 2600 Input VAT | 57,00 € | ||
| 4400 Trade payables | 357,00 € |
Returning goods to the supplier
If part of the goods is faulty and is sent back, you simply reverse the entry for that part. Example: timber worth 500,00 € net goes back. The debt falls by 595,00 € and the input VAT by 95,00 €.
| Debit | Amount | Credit | Amount |
|---|---|---|---|
| 4400 Trade payables | 595,00 € | 6000 Expenses for raw materials | 500,00 € |
| 2600 Input VAT | 95,00 € |
The payment later on
When Holzwerk Brandt GmbH pays the first invoice of 9.520,00 € by bank transfer, the debt is settled:
| Debit | Amount | Credit | Amount |
|---|---|---|---|
| 4400 Trade payables | 9.520,00 € | 2800 Bank | 9.520,00 € |
At the time of payment, input VAT no longer plays a role. It was already booked at the purchase.
Common mistakes
- Gross amount booked on 6000: Only the net amount belongs on the expense account.
- Output VAT instead of input VAT: When you buy, you pay tax to the supplier. That is input VAT (2600), not output VAT (4800).
- Delivery costs booked on 6000: Freight and packaging belong on 6001 Delivery costs.
- Forgetting the input VAT on a return: When the net value falls, the input VAT falls too.
In short
For a raw materials purchase on credit, the net value goes on 6000, the tax on 2600 and the gross amount on the credit side of 4400. Delivery costs get their own account, 6001. If you remember this pattern, you can book almost any purchase with confidence.
Practise it yourself
Reading is a good start, but you only become confident by practising. In FiBu to go you can train journal entries under the IKR step by step. You can try the placement test and a sample exercise for free and without signing up. If you like it, there is a week pass (4,90 €) or a month pass (9,90 €), each a one-off payment with no subscription. Are you training to be a clerk in office management (Kauffrau or Kaufmann für Büromanagement)? Then take a look at FiBu für Büromanager, which is tailored to vocational school and the IHK exam for your profession. Masterivo is an independent provider and is not affiliated with the IHK.
Frequently asked questions
Which account do I use for a raw materials purchase under the IKR?
With consumption-based booking, you book the net value on 6000 Expenses for raw materials. The tax goes on 2600 Input VAT and the gross amount on 4400 Trade payables.
Where do freight and packaging costs go?
You book these delivery costs on 6001 Delivery costs. The VAT charged on them goes on 2600 Input VAT as usual.
Do I have to book input VAT again when I pay?
No. Input VAT is booked as soon as the invoice arrives. When you pay, you only book 4400 Trade payables to 2800 Bank.
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