Question

develop a control plan to control the distribution of office supplies.

the plan should clearly indicate the various mechanisms available for the control of office supplies as well as a template to record movement of the office supplies sufficiency. (basically inventory)

Answer 1

Company maintains a selection of office supplies for employee use, which means you need to maintain a consistently updated list of inventory purchased and used within a specific accounting period. An accurate inventory serves a two-fold purpose: it helps ensure your business does not run out of necessary office supplies, and it allows you to properly account for office supply purchases as assets or liabilities under an accrual system of accounting.

Taking an Accurate Inventory

Prepare an Inventory Log

Visit your company’s supply closet with an inventory log sheet to record the supplies currently on hand. If your company prefers to maintain office supply inventory records in a spreadsheet or word processing table, bring a laptop or tablet to expedite the data entry process.

Group Supplies by Type or Location

Separate supplies into related groups such as writing implements, copy paper, notebooks, desktop items and filing supplies. Separating supplies based on their product numbers or UPC codes is also an option if your company maintains multiple office supply caches. A larger company that uses supplies across multiple departments may prefer a more detailed approach to supply management, but general categories suffice for most small businesses.

Do an Item Count

Enter the category of the item or the item number in your inventory log. Record the number of currently available units in an adjacent column.

Determine Reorder Levels

Determine the reorder level for each item by assessing how quickly your company consumes the product and how quickly the product can be replaced. For example, if your company consumes three boxes of copy paper per week, and it takes one week to receive a new shipment of copy paper from your supplier, then your reorder should occur when your copy paper inventory drops to four to six boxes. Reordering supplies before your inventory reaches a critically low level provides a time cushion in case your paper consumption increases or a delay occurs with delivery. Add a note to your log specifying the reorder level for each item.

Record Supply Purchases

Record new office supply purchases as they are made.

Accounting for Inventory

Update the Company Ledger

Record the total value of an office supply purchase in your company's ledger as an asset. When supplies have not yet been used, they are considered assets instead of expenses under an accrual accounting system. If you already have an entry for office supplies in your asset column, add the cost of the new purchases to the existing total.

Step 2: Perform Periodic Inventory Checks

Visit the company supply closet at the end of an accounting period and perform an inventory check. Compare the total units currently on hand for each item number or category to the totals entered in your inventory log.

Update the Inventory Log

Enter your new totals for each inventory item or category in your log.

Calculate Unit Cost

Multiply the unit cost of an item consumed by the total number of units consumed to arrive at your total inventory expense for that item or category. For example, if pens cost $10 per unit and 12 units were consumed, the total inventory expense for the item is $120.

Calculate Total Inventory Expense

Add your per item totals together to arrive at your total office supply expense for the accounting period. This total is the accumulated value of the office supplies actually consumed within your company during the current period.

Update the Books

Subtract the office supply expense for the current accounting period from your office supply assets entry in the company ledger. Leave a journal entry explaining the removal of funds. For example: "Office supply expense removal for January." Enter the total supply expense for the accounting period in the liability section of your ledger.

Basic Inventory Template

Inventory ID	Name	Description	Unit price	Quantity in stock	Re-order level	Re-order time	Quantity in re-order