Example of Forecasting Office Supplies

NOTE 6 - OFFICE SUPPLIES

The chart below provides the calculations used in determining the Company's office supplies expense and ending office supply account balance.

  YEAR 1 YEAR 2 YEAR 3
Beginning Office Supplies $ nil $ 500 $ 735
Add: Purchases of Office Supplies $2,000 $1,950 $1,650
Total Office Supplies Available $2,000 $2,450 $2,385
Estimated Consumption of Available Supplies 75% 70% 80%
Office Supplies Expense (Income Statement) $1,500 $1,715 $1,908
Remaining Office Supplies (Balance Sheet) $ 500 $ 735 $ 477

 

As you can see, J&B is forecasted 75%, 70%, and 80% of the available office supplies will be consumed and therefor expensed in years one, two and three. As a result, the unused office supplies of $500, $735, and $477 appears on the Company's forecasted balance sheet.