Purchase Office Supplies on Account

When a business purchases office supplies on account it needs to record these as supplies on hand. As the supplies on hand are normally consumable within one year they are recorded as a current asset in the balance sheet of the business.

Purchase Office Supplies on Account Journal Entry Example

For example, suppose a business purchases pens, stationery and other office consumables for 250, and is given credit terms from the supplier.

The accounting records will show the following purchased supplies on account journal entry:

Purchase Office Supplies on Account Journal Entry
Account Debit Credit
Supplies on hand 250
Accounts payable 250
Total 250 250

Bookkeeping Explained

The business has received consumable office supplies (pens, stationery, etc.) and holds these as a current asset as supplies on hand.

The credit entry represents the liability to pay the supplier in the future for the goods supplied.

Purchase Office Supplies on Account Accounting Equation

The accounting equation, Assets = Liabilities + Owners Equity means that the total assets of the business are always equal to the total liabilities plus the total equity of the business This is true at any time and applies to each transaction. For this transaction the accounting equation is shown in the following table.

Purchase Office Supplies on Account Accounting Equation
Assets = Liabilities + Owners Equity
Supplies on hand = Accounts payable + None
250 = 250 + 0

In this case an asset (supplies on hand) increases representing office consumables held by the business for immediate use. The other side of the accounting equation is the liability to pay the supplier for the items (accounts payable) at a future date.

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Purchase Office Supplies on Account November 6th, 2016Team

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