Example of Forecasting Office Supplies
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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.