Question

Vouchers in the amount of $325,000 were authorized for payment. This was $8,000 less than the...

Vouchers in the amount of $325,000 were authorized for payment. This was $8,000 less than the amount originally encumbered for these purchases. (Journal entry completed by instructor--- SEE JOURNAL ENTRY SECTION BELOW) – You are required to explain each line of the journal entry and related financial statement impact.

6.   Expenditures                                                        325,000

Vouchers Payable                                                            325,000

Fund Balance - Assigned                                     333,000

Encumbrances                                                                  333,000

Explain each line of the journal entry and related financial statement impact.

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

_______________________________________________________________________________

Homework Answers

Answer #1
  • Expenditures represent expenditure made for purchases for $325,000 and it is shown as purchases in the trading account. Stock will be increased by $325,000 which means assets will be increased by $325,000
  • Vouchers payable represent amount to be paid for the purchases made above of $325,000 and it is shown as accounts payable in the balance sheet.Liabilty will be increased by $325,000
  • Fund balance assigned is the amount which has been given for purchases and therefore fund balance will be reduced.
  • Encumbrances is the restricted amount which cannot be utilised for any other purposes. Fund balance will be increased.
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