The Town of Red Herring issued $60,000 of purchase orders. Assume that when all orders were received, the actual cost was $59,000. How much would be recorded as expenditures when the goods are received?

Question

Quizplus · Accepted Answer

The actual cost of the goods received was $59,000. Therefore, only $59,000 should be recorded as expenditures when the goods are received. The $1,000 difference between the amount of purchase orders issued and the actual cost will be recorded as a credit to accounts payable.

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