What is the difference between supplies and supplies expenses?

Supplies is an asset. It's supplies that you still have and are as yet unused. Since you have them and they still have value (they are something you can use) that makes them an asset.

Supplies expense is for the supplies which have been used up. If they're used, they can't stay an asset cause you no longer have them and they have no value anymore. Part of the definition of an expense is assets that are consumed.

What is the meaning of supply on hand? How do we treat it on the journal?

Supplies on hand is exactly what it says it is: the amount of supplies that you have on hand at a given point in time.

But it won't agree with what is in the account, because you haven't been expensing it every time you pull a pencil out of the supply room. So it goes into the asset when you get it, and sits there until the end of the period. Then the supplies on hand are counted, and you adjust the account to agree with that number. The amount used credits out of the supplies (asset) and debits into the expense.

So if there's 1000 in the supplies account and only 300 are on hand, then you've used 700 of them. The 700 has to move from the asset account to the expense.

Supplies on hand at march 31, $ 1,100