The general fund of Athens ordered computer equipment on December 1,2008,for $32,000.The order was appropriately encumbered on this date.Athens received the computer equipment on January 25,2009,and issued a voucher to pay the vendor $32,400.Athens uses the calendar year for reporting,and all outstanding encumbrances lapse at year-end.Athens' governing board honors all outstanding encumbrances by including them in the following year's appropriations.On January 25,2009,the general fund of Athens should debit:
A)Encumbrances for $32,000.
B)Fund Balance-Reserved for Encumbrances for $32,400.
C)Expenditures-2008 for $32,400.
D)Expenditures for $32,400.

Question

Quizplus · Accepted Answer

On January 25, 2009, when Athens received the computer equipment and issued a voucher to pay the vendor $32,400, it recognized an expenditure of $32,400. Therefore, the general fund of Athens should debit Expenditures for $32,400. Option A is incorrect because the encumbrance was already recognized on December 1, 2008. Option B is incorrect because the fund balance reserved for encumbrances would be closed at year-end since Athens lapses all outstanding encumbrances at year-end. Option C is incorrect because the expenditure was recognized in 2009, not 2008.

The General Fund of Athens Ordered Computer Equipment on December