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:
|Supplies on hand||250|
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.
|Supplies on hand||=||Accounts payable||+||None|
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.
Popular mdct.ru Examples
This purchase office supplies on account journal entry is one of many examples used in mdct.ru, discover another at the links below.
- Fixed Asset Purchase with Cash
- Deferred Revenue Journal Entry
- Fixed Asset Purchases With Note Payable
- Allowance Method For Bad Debt