Expenses & income · Level: Basics
Journal entry: Buying office supplies
Office supplies are used up, so they are an expense, not an asset; input VAT is reclaimed as usual.
Worked example
We buy office supplies for £200.00 plus 20% VAT and pay in cash.
Correct journal entry
Office supplies £200.00, Input VAT £40.00 / Cash £240.00
Debit
Office supplies£200.00
Input VAT£40.00
Credit
Cash£240.00
Why?
- Office supplies: expense incurred → debit
- Input VAT: asset increases → debit
- Cash: asset decreases → credit
Calculation
- VAT: 20% of £200.00 = £40.00
- Gross amount: £200.00 + £40.00 = £240.00
Typical mistake
Booking supplies as Purchases: they are not for resale.
Your turn
Three problems on exactly this case, with different numbers. Amounts work with or without separators, e.g. 2,400.00 or 2400.
Transaction
We buy office supplies for £70.00 plus 20% VAT and pay in cash.
Debit
Assets up · expenses · liabilities down
Total debit£0.00
Credit
Liabilities up · income · assets down
Total credit£0.00
Frequently asked questions
What is the journal entry for buying office supplies?
Example: Office supplies £200.00, Input VAT £40.00 / Cash £240.00.
How do I recognise this case?
Office supplies are used up, so they are an expense, not an asset; input VAT is reclaimed as usual.
What is the typical mistake?
Booking supplies as Purchases: they are not for resale.