The City of Batavia ordered new computer equipment for $25,000 on November 3, 20X2. The equipment had not been received by December 31, 20X2, Batavias fiscal year-end. Required:

c. Now assume the city has a policy that outstanding encumbrances are nonlapsing, but the 20X3 City Council decided, during its budget hearings for 20X3, not to accept the encumbrance for the computer equipment that had been ordered on November 3, 20X2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. (1) Prepare the entry required on January 1, 20X3, to cancel the encumbrance reserve for the equipment ordered on November 3, 20X2.

Journal entry worksheet