There are two ways to account for supplies:
(1) expense supplies when they are purchased (this should only be done if the company has a trivial amount of supplies)
(2) record an asset when supplies are purchased, then expense the asset over time as supplies are used up
With the second method, the company would debit the supplies account whenever supplies are purchased. At the end of each period, the company would count the total amount of supplies on hand and expense the difference between the supplies balance and the supplies on hand. Then the company would debit supplies expense and credit the supplies account for the reduction in supplies.
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