When office equipment is purchased on credit, there are several journal entries that must be made to record the transaction. These transactions will affect both your balance sheet and your income statement, so it’s important to make sure that you record these properly.
Assets Liabilities + Owners Equity
When you buy office supplies on credit, you’ll increase both your assets and your liabilities. This will affect your accounting equation, which says that your total assets must be equal to your total liabilities plus your stockholders’ equity.
A company’s assets are its property (things it owns that can be sold or transferred). When you buy office supplies on credit, you’re adding to your inventory.
You’ll also add to your accounts payable, as you’re paying for the goods you’ve purchased with credit. When you pay for an item on credit, your cash account will be debited for the amount you’re paying.
Office supplies and office expenses are usually recorded as expenses rather than as assets. This is because they’re not physical items that can be disposed of like a computer or copier.
However, you may be wondering how to classify the purchase of an office computer or printer. This is a complicated question, and it’s up to you to decide whether to expense the equipment immediately or to classify it as an asset and depreciate it over time.
If you decide to record the purchase as an asset, you’ll need to create a new account called “Office Equipment” and set up an “Acquired Depreciation” account (a contra-asset accont – normal balance is a debit). This account will allow you to write off the cost of the equipment over a period of time.
You’ll need to make a journal entry to record the purchase of an office computer and a printer. This is one of many journal entries that you’ll need to make when preparing a financial statement for a small business, so it’s helpful to understand how these two transactions will affect your financial statements.
In addition, you’ll need to record the costs of depreciating the office equipment over time. This will add to your office expenses and affect the net income of your business.
If you’re unclear about how to record the purchase of an office computer or printer, it’s best to consult an accountant for help. They can explain how to record each of these transactions and advise you on the best way to classify them. They can also recommend a bookkeeping system that will best suit your company’s needs. The right system will ensure that your accounting records are accurate and that you’re reporting your finances in a way that’s most beneficial to your business.
