A federal agency recorded the receipt of supplies at an actual cost of $57,000. At the time the purchase orders were issued it was estimated the supplies would cost $56,000. How would this transaction be recorded in the budgetary track accounts?

Question

Quizplus · Accepted Answer

The budgetary track accounts are used to record the estimates, allotments, and expenditures related to the budget. In this case, the purchase orders were issued with an estimate of $56,000, which means that the Undelivered Orders account should be debited for that amount. However, the actual cost of the supplies received was $57,000, so the Expended Authority account should be credited for that amount.

The difference between the estimate and the actual cost ($57,000 - $56,000 = $1,000) should be recorded in the Allotments account as a debit, since the agency has now used more of its authority than originally allotted. Therefore, the correct journal entry would be:

Debit Undelivered Orders $56,000
Debit Allotments $1,000
Credit Expended Authority $57,000

A Federal Agency Recorded the Receipt of Supplies at an Actual