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Encumbrance and expenditure accounting The city council made an appropriation to the police department of $95,000 for the purchase of supplies and equipment. The following
Encumbrance and expenditure accounting The city council made an appropriation to the police department of $95,000 for the purchase of supplies and equipment. The following transactions and events occurred regarding this appropriation. 1. The department placed purchase order (PO) 1 for 5 motorcycles, estimated to cost $10,000 each. 2. The department placed PO 2 for crime prevention supplies at an estimated cost of $30,000. 3. The motorcycles ordered in PO 1 arrived in good condition. The invoice of $50,000 was approved for payment. 4. PO 3 was placed for radio equipment at an estimated cost of $10,000 5. The supplies ordered in PO 2 arrived, along with an invoice for $32,000. The invoice was approved for payment. 6. The department obtained a check from the finance director for $250, made out to a local supplier, to purchase a new firearm for $250 on an emergency basis; no purchase order had been placed a) Prepare journal entries to record the transactions and events. Charge all expenditures to Supplies and equipment. (Assume the approved budget has already been recorded.) a) Prepare journal entries to record the transactions and events. Charge all expenditures to Supplies and equipment. (Assume the approved budget has already been recorded.) Credit Debit 50,000 0 0 50,000 V 30,000 0 0 30,000 50,000 0 50,000 0 v 0 v Account Encumbrances - supplies and equipment Budgetary fund balance reserved for encumbrances To record PO 1. Encumbrances - supplies and equipment Budgetary fund balance reserved for encumbrances To record PO 2 Budgetary fund balance reserved for encumbrances Encumbrances - supplies and equipment To record receipt of motorcycles Encumbrances - supplies and equipment Budgetary fund balance reserved for encumbrances To record invoice for motorcycles. Encumbrances - supplies and equipment Budgetary fund balance reserved for encumbrances To record PO 3 Vouchers payable Cash To record receipt of radio equipment Encumbrances - supplies and equipment Budgetary fund balance reserved for encumbrances To record invoice forradio equipment Expenditures - Supplies and equipment Cash To record purchase of firearm 32,000 0 32,000 > 10,000 0 0 10,000 10,000
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