Purchasing Supplies

There are hundreds of other purchases that a small-business owner needs to make in a year other than inventory purchases. These include office supplies, rent, utilities, and office cleaning services. Recording these items is straightforward:

         Office supplies (or whichever category) $12.95

         DR Retail sales taxes recoverable                     .91

         CR Cash (or Accounts payable)                                 $13.86

 

If you work with a computerized system, you will not only be able to summarize purchases by account category, you will also have the ability to summarize by vendor. This is good information to have. It lets you compare the volume of purchases by each vendor.

The fact that you need to do this adjustment tells you that you didn't sell as much as you purchased in the year. Some of the goods were still in inventory at the end of the year. Your entry corrects this difference.