andymag
Apr 23, 2011, 12:36 AM
If supplies are bought on credit, and you debit supplies (asset), credit accounts payable do you also debit supplies axpense
pready
Apr 24, 2011, 09:16 AM
The expense account is not debited until the supplies are actually used.
Think of it this way: When you puchase the supplies you are purchasing them in advance, just like when you purcahse an insurance policy. The supplies are a current asset just like prepaid insurance, but when you use the supplies they are expensed, just like insurance.
Your journal entry for the purchase of supplies will be:
Debit Supplies (Balance sheet account, current asset) for the amount
Credit Accounts Payable (Balance sheet account, current liabilities) for the amount