The City of Batavia ordered new computer equipment for $21,000 on November 3, 2022. The equipment had not been received by December 31, 2022, Batavias fiscal year-end.

c. Now assume the city has a policy that outstanding encumbrances are nonlapsing, but the 2023 City Council decided, during its budget hearings for 2023, not to accept the encumbrance for the computer equipment that had been ordered on November 3, 2022. (1) Prepare the entry required on January 1, 2023, to cancel the encumbrance reserve for the equipment ordered on November 3, 2022. General Journal Debit Credit Date 1-Jan-23