The Town of Red Herring issued $60,000 of purchase orders and recorded the encumbrance. Assume that when all orders were received, the actual cost was $59,000. What would be the net change in the unencumbered balance when the goods are received?

Question

Quizplus · Accepted Answer

When the goods are received, the encumbrance of $60,000 is reversed, and the actual expenditure of $59,000 is recorded, resulting in a net increase of $1,000 in the unencumbered balance.

The Town of Red Herring Issued $60,000 of Purchase Orders