The schedule that follows reports the beginning balances and activity during the year in a town€™s supplies fund (a governmental fund). The government accounts for supplies on a purchases basis (in thousands).

1. Compute the following (and show your computations):
a. Fund balance, non-spendable (inventory), December 31
b. Fund balance, assigned (encumbrances), December 31
c. Fund balance (unassigned), December 31
2. How can you justify the continued use of the purchases method when it appears so contrary to everything you learned in classes pertaining to businessaccounting?

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Fund balance (unassigned), January I Fund balance, assigned $400 240 170 (encumbrances),January I Fund balance, nonspendable (inventory), January 1 Total fund balance, January 1 Appropriations (for purchases of 810 supplies) Estimated revenues Actual revenues Supplies ordered Supplies received Supplies paid-for Sunnlies used %3,400 3,200 3,300 3,160 3,360 2,800 3.280