Paid Cash for Supplies

When a business purchases supplies for cash 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.

Paid Cash for Supplies Journal Entry Example

For example, suppose a business purchases supplies such as paper towels, cleaning products and other consumables for a total amount of 50, and pays for the items with cash.

The purchase of supplies for cash is recorded in the accounting records with the following bookkeeping journal entry:

Paid Cash for Supplies Journal Entry
Account Debit Credit
Supplies on hand 50
Cash 50
Total 50 50

Bookkeeping Explained

The business has received consumable supplies (paper towels, cleaning products, etc.) and holds these as a current asset as supplies on hand.

The credit entry represents the cash leaving the business to pay the supplier.

Paid Cash for Supplies 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 – Cash = None + None
50 – 50 = 0 + 0

In this case one asset (supplies on hand) increases representing the consumables held by the business for immediate use, and another asset (cash) is reduced to show the cash leaving the business when the supplier is paid.

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