A city received supplies that had been previously encumbered. The supplies were encumbered for $5,000 and had an actual cost of $4,900. To recognize this event the county should make which of the following entries?
A) Debit Reserve for encumbrances $5,000 and Supplies $4,900; Credit Encumbrances $5,000 and Vouchers payable $4,900.
B) Debit Encumbrances $5,000 and Supplies $4,900; Credit Reserve for encumbrances $5,000 and Vouchers payable $4,900.
C) Debit Reserve for encumbrances $4,900 and Supplies $4,900; Credit Encumbrances $4,900 and Vouchers payable $4,900.
D) Debit Encumbrances $4,900 and Supplies $4,900; Credit Reserve for encumbrances $4,900 and Vouchers payable $4,900.

Question

Quizplus · Accepted Answer

The correct entry involves debiting Reserve for encumbrances for the full encumbered amount ($5,000) and Supplies for the actual cost ($4,900), while crediting Encumbrances for the full encumbered amount ($5,000) and Vouchers payable for the actual cost ($4,900).

A City Received Supplies That Had Been Previously Encumbered