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Q.3. During July 2011, the first month of the 2012 fiscal year, the City of Marion issued the following purchase orders and contracts : $
Q.3. During July 2011, the first month of the 2012 fiscal year, the City of Marion issued the following purchase orders and contracts : $ 58,000 General government Public safety Health and welfare Public works Miscellaneous Total purchase orders and contracts 250,000 392,000 160,000 71,000 $931,000 Required: a) Differentiate between Encumbrances and Expenses (2 Marks) b) Record the preceding transaction in the general journal entry to record the issuance of the purchase orders and contracts. Show entries in subsidiary ledger accounts as well as general ledger accounts? (2 Marks) c) Explain why state and local governments generally record the estimated amounts of purchase orders and contracts in the accounts of budgeted governmental funds, whereas business entities generally do not prepare formal entries for purchase orders. (1 Marks)
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