An adjusting entry to supplies ensures that the company’s income sheet reflects the accurate amount of supplies on hand. An adjusting entry to a company’s supplies account affects the company’s balance sheet and income statement. When a company purchases supplies, the cash account is credited and the supplies account is debited for the same amount. An adjusting entry must be recorded in the company’s general journal to indicate the amount of supplies used in a given period.

Step 1.

Locate the general journal. View the original amount of supplies recorded in the general journal. The original journal entry will show a debit in the supplies column and a credit in the cash column. This is the starting point for making an adjustment entry for supplies on hand. Notice the amounts in each account. For example, a $1,500 credit in the cash column should correspond with a $1,500 debit in the supplies column.

Step 2.

Count the supplies on hand. After conducting an audit of the company’s remaining supplies, you can make an adjusting entry that reflects the amount of supplies used by the company.

Step 3.

Record the date of the adjusting entry. The date when the supplies adjustment occurs is important for record-keeping purposes and helps the company in the event of an audit.

Step 4.

Write supplies expense in the general journal. Write the amount that corresponds with the supplies used in the debit column. For instance, if a company used $1,000 in supplies for a given period, the adjusting entry should be a $1,000 debit to supplies expense.

Step 5.

Write supplies on the line directly underneath the supplies expense entry. Write the same amount in the credit column that appears in the debit column for supplies expense. For instance, if the supplies expense has a $1,000 debit, the company must credit supplies for $1,000. In this case the company has a $500 balance in its supplies account. This amount exists as an asset on the company’s balance sheet.