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    andymag's Avatar
    andymag Posts: 1, Reputation: 1
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    #1

    Apr 23, 2011, 12:36 AM
    If supplies are bought on credit, what is the journal entry
    If supplies are bought on credit, and you debit supplies (asset), credit accounts payable do you also debit supplies axpense
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    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

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