1. Assume that a town places an order for a truck with an estimated cost of $39,850. When the truck is delivered, the actual cost is $45,600.

Required: Prepare the journal entry to record the issuance of the purchase order and its payment when the truck is delivered.

2. Hamilton Township needs to make its closing entries to close out its budgetary and operating accounts. Assume that Hamilton Township has a balance remaining of $275,000 in encumbrances outstanding as of the end of the year. The outstanding invoices are expected to be honored in the next fiscal year.

Required: Prepare the journal entries to close the encumbrance account.