Your Questions About Purchased Supplies On Account

James asks…

The balance in the office supplies account on July 1 was $3,200 , supplies purchased during July were $2,500 ,

The balance in the office supplies account on July 1 was $3,200 , supplies purchased during July were $2,500 , and the supplies on hand at July 31 were $2,800. What is the amount of supplies to be expensed for the month as the adjusting entry ?

$3,500
$2,800
$3,200
$2,900

Justin answers:

Why are you asking this question in Law & Ethics? Sounds like an accounting question to me.

Paul asks…

Purchased on account $1,300 of store supplies. Can you please tell me how I would journalize this?

Justin answers:

Dr Supplies 1,300
Cr Accounts Payable 1,300

Chris asks…

purchasing supplies on account increases liabilities and decreases stockholders’ equity?

Justin answers:

This question has multiple answers, depending on how you buy them:

situation 1: you pay for them immediately, lets assume with cash:

decrease in cash (current asset)
increase in inventory (current asset).

No change in liabilities, no change in stockholders’ equity.

Situation 2: you will pay for the supplier on a later date:

increase in inventory (current assets)
increase in liabilities

no change in stockholders’ equity.

If the problem involves other steps than just a 1 variable purchase of supplies, please re-post the question with all steps clearly explained.

Mark asks…

Purchased supply on credit, you would credit “Account Payable”…?

I am having trouble with choosing account name… I thought that

Purchased supply on account/credit/cash always be like:
Supply(DEBIT)
Cash(CREDIT)

but I kind of noticed that
Purchasing supply on account or credit
Supply ( Debit)
Account Payable (Credit)

Purchasing supply in Cash
Supply (Debit)
Cash (Credit)

I am wondering if what I noticed is right or wrong…I am having hard time to understand since it is an online course 🙁

Justin answers:

If you are purchasing something, you would only credit cash if you are paying with cash, otherwise use Accts Payable. It’s the same if someone buys something from you. If they use cash you would debit Cash, otherwise you would debit Accts Receivable.

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