# Consumable Supplies Expense Recorded

When a business purchases consumable supplies such as stationary, it records these as supplies on hand in the balance sheet of the business. At the end of an accounting period, the consumable supplies on hand are counted and amount used is recorded as an expense in the income statement using an adjusting entry

As an example, suppose a business has a balance on its consumable supplies on hand account in the general ledger of 500. At the end of the accounting period a physical count is carried out revealing the amount of 350 is actually held as an asset. The difference of 150 represents the amount of consumable supplies used during the period.

## Consumable Supplies Used Journal Entry

At the end of the accounting period the business needs to record the adjustment of 150 to the consumable supplies on hand account with the following journal entry:

Supplies on Hand Journal Entry
Account Debit Credit
Consumable supplies expense 150
Consumable supplies on hand 150
Total 150 150

## The 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 owners 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.

Consumables on Hand – Accounting Equation
Assets = Liabilities + Owners Equity
Supplies on hand = None + Supplies expense
-150 = 0 + -150

In this case on the left hand side of the accounting equation the asset of supplies on hand decreases by 150. To balance the equation the supplies expense in the income statement reduces the net income, retained earnings, and therefore the owners equity in the business by the same amount of 150.

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Consumable Supplies Expense Recorded November 6th, 2016

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