Fargo ordered new office equipment for \(\$ 12,500\) on April 20, 20X1. The office equipment had not been received by June 30, 20X1, the end of Fargo's fiscal year.

\section*{Required}

a. Assume that outstanding encumbrances lapse at year-end.

(1) Prepare the entries required on June 30, 20X1.

(2) Assuming that the city council accepts outstanding encumbrances in its budget for the next fiscal period (20X2), prepare entries on July 1, 20X1.

(3) Prepare entries on July 24, 20X1, when the equipment was received with an invoice for \(\$ 12,750\).

b. Assume that outstanding encumbrances are nonlapsing.

(1) Prepare the entries required on June 30, 20X1.

(2) Prepare the entry required on July 1, 20X1, to identify the expenditure with \(20 \mathrm{X} 1\).

(3) Prepare the entry on July 24, 20X1, when the equipment was received with an invoice for \(\$ 12,750\).

(4) Prepare the closing entry on June 30, 20X2, assuming the expenditure is netted against 20X2 expenditures.