Purchases are the items you buy and resell to customers. If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products. Your supporting documents should show the amount paid and that the amount was for purchases. Documents for purchases include the following.
Canceled checks.
Cash register tape receipts.
Credit card sales slips.
Invoices.
These records will help you determine the value of your inventory at the end of the year. See Publication 538 for information on methods for valuing inventory.
Information courtesy of the Internal Revenue Service.
