What Are Office Supplies On Hand And Office Supplies Expense - Definition And Meaning - Journal Entry

In a business office, Office Supplies On Hand / Office Supplies Unused are needed which are consumable items such as printer, pencil, pen, ink port, paper, telephones, etc., Without these supplies, a business can not be functional effectively.

The word “Supplies On Hand” means that office supplies is available for use in the business when the business initially purchased it or that it is still not used at the end of the accounting period.

When office supplies on hand is purchased, then it is existed or available for use in the business and its benefit will be get by the business in future. During the accounting period, all supplies are not consumed or used but remained to be used in the next accounting period. These remaining supplies are called closing supplies on hand and those supplies which are used or consumed during the period are called supplies expense because the business has utilized these supplies to get benefits from these i.e., print papers, use office calls for business works, etc.

Supplies on hand like Inventory or Stock is considered as a Current Asset, which is a Permanent Account and shown in the Balance Sheet on Assets side while office supplies expense is shown in the Income Statement as a Temporary Account.

How To Calculate Supplies On Hand And Supplies Expense Account

The formula used to calculate Supplies On hand and Supplies Expense Account, which is the same as in case of Cost of Sales or Cost of Goods Sold, is shown below:

Office Supplies Expense = Opening Supplies on hand - Purchased Supplies on hand - Closing Supplies on hand

Here Opening Supplies on hand is the supplies remained on hand in the previous accounting period.

Purchased Supplies on hand includes those which are purchased for cash or on credit / account during the period.

Closing Supplies on hand which remains on hand during the current accounting period.

Office Supplies On Hand Journal Entry

The entry to record Office supplies on hand of Rs. 5000 for cash is shown below:

                                     Office Supplies On Hand a/c  2000

                                                                                   Cash a/c  2000

                                          (Office Supplies on Hand Purchased For Cash)

Office Supplies Expense Journal Entry

Suppose, out of offices supplies purchased, office supplies of Rs. 2000 remains on hand at the end of the accounting period , then the adjusting entry to record cost of office supplies used during the period is shown below:

                         Office Supplies Expense a/c  3000

                                                                        Office Supplies On Hand a/c  3000

                      (To Adjust the Cost of Office Supplies On Hand Remained In The Business)

Here cost of office supplies used or office supplies expense is Rs. 5000 - 2000 = Rs. 3000 (Assuming that there is no Opening Office Supplies as it is the first year of business commencement or start-up year.

Office supplies expense account is recorded in Income Statement as a General and Administrative Expenses while the ending or closing office supplies on hand will go to the balance sheet as a current asset.