Purchase office supplies on account journal entry

Q: What does it mean to purchase supplies on account?

What Is On Account? On account is an accounting term that denotes partial payment of an amount owed. On account is also used to denote the purchase/sale of goods or services on credit. On account can also be referred to as on credit.”

Overview

In business, the company usually needs to purchase office supplies for the business operation. Likewise, when it paid cash for supplies, it needs to make a proper journal entry, based on whether it is on the purchasing date or it is on a later date for settlement the payable it has made on the purchasing date.

Table of Contents Show

Paid cash for supplies journal entry
Paid cash for supplies example
How do I record purchase of supplies on account?
How do you record office supplies on account?
What happens when you purchase office supplies on account?
What does it mean to purchase supplies on account?

Paid cash for supplies journal entry

The company can make the journal entry for the supplies it paid the cash for by debiting the office supplies account and crediting the cash account.

Account	Debit	Credit
Office supplies	000
Cash		000

The office supplies account is an asset account, in which its normal balance is on the debit side. The company usually records the office supplies that it paid the cash for as an asset on the balance sheet and only when such supplies are used, does the company record them as the expense on the income statement.

Sometimes, the company may purchase the supplies on the credit, and only later does it pays the cash to settle such credit. In this case, the journal entry for the paid cash is with the debit of accounts payable and the credit of the cash account.

Account	Debit	Credit
Accounts payable	000
Cash		000

This is the case where the company paid cash to settle the liability that it have made when purchasing the office supplies. Of course, the office supplies would be already debited at the date of the purchase with the credit of accounts payable when the company made a credit purchase.

Paid cash for supplies example

For example, on March 18, 2021, the company ABC purchases $ 1,000 of office supplies by paying with cash immediately.

In this case, the company ABC can make the journal entry for the paid cash for supplies on March 18, 2021, as below:

Account	Debit	Credit
Office supplies	1,000
Cash		1,000

Example 2

On March 19, 2021, the company ABC make another purchase of supplies amounting to $3,000 on credit. Later, on March 26, 2021, it makes the payments of $3,000 to settle the credit purchase of supplies on March 19, 2021.

In this case, the company ABC would make the journal entry of the purchase of supplies on March 19, 2021, with the debit of office supplies account 3,000 and the credit of accounts payable 3,000.

Account	Debit	Credit
Office supplies	3,000
Accounts payable		3,000

Later, on March 26, 2021, when the company ABC makes the payments of $3,000 to settle the above credit purchase of supplies, it can make the journal entry as below:

Account	Debit	Credit
Accounts payable	3,000
Cash		3,000

May 23, 2022/ Steven Bragg

Supplies are incidental items that are expected to be consumed in the near future. The normal accounting for supplies is to charge them to expense when they are purchased, using the following entry.

	Debit	Credit
Supplies expense	xxx
Accounts payable		xxx

If the cost of the supplies that you have purchased and not yet consumed is significant, then you can instead record them as an asset, using the following entry:

	Debit	Credit
Supplies on hand	xxx
Accounts payable		xxx

By using this later approach, the supplies will appear on your balance sheet as a current asset, until you use them and charge them to expense with this entry:

	Debit	Credit
Supplies expense	xxx
Supplies on hand		xxx

Thus, consuming supplies converts the supplies asset into an expense.

Despite the temptation to record supplies as an asset, it is generally much easier to record supplies as an expense as soon as they are purchased, in order to avoid tracking the amount and cost of supplies on hand. Also, charging supplies to expense allows for the avoidance of the fees charged by external auditors who would otherwise want to audit the supplies on hand asset account.

How do I record purchase of supplies on account?

A purchase of supplies on account is recorded as a debit to supplies expense and a credit to accounts payable.

How do you record office supplies on account?

In the case of office supplies, if the supplies purchased are insignificant and don't need to be classified as a current asset, you can simply debit the supplies as an expense to your Office Supplies account. You would then credit your Cash account if you paid for the supplies in cash.

What happens when you 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.

What does it mean to purchase supplies on account?

What Is On Account? "On account" is an accounting term that denotes partial payment of an amount owed. On account is also used to denote the purchase/sale of goods or services on credit. On account can also be referred to as “on credit.”