The Town of Tonawanda has $21,000 of purchase orders outstanding at the end of 2008 which will be honored. The goods and supplies were received early in January, 2009. The invoice amounted to $19,300 What is the journal entry necessary to record receipt of goods and supplies?
A.
$\begin{array}{lccc}
\text { Encumbrances Control(2008) } &21,000 \
\text { Reserve for Encumbrances (2008) } & &21,000
\end{array}$
B.
$\begin{array}{lccc}
\text { Reserve for Encumbrances (2008) } &21,000 \
\text { Fund Balance - Unreserved } & &21,000
\end{array}$
C.
$\begin{array}{lccc}
\text { Encumbrances Control (2008) } &21,000 \
\text { Accounts payable } & &21,000
\end{array}$
D.
$\begin{array}{lccc}
\text { Reserve for Encumbrances } &21,000 \
\text { Encumbrances Control (2008) } & &21,000\
\text { Expenditures Control (2008) } &19,300 \
\text {Accounts payable } & &19,300\
\end{array}$

Question

The Town of Tonawanda has $21,000 of purchase orders outstanding at the end of 2008 which will be honored. The goods and supplies were received early in January, 2009. The invoice amounted to $19,300 What is the journal entry necessary to record receipt of goods and supplies? 
A.
$\begin{array}{lccc}
  \text {  Encumbrances Control(2008)  } &21,000 \
 \text { Reserve for Encumbrances (2008) } & &21,000
\end{array}$
B.
$\begin{array}{lccc}
  \text { Reserve for Encumbrances (2008)  } &21,000 \
 \text { Fund Balance - Unreserved } & &21,000
\end{array}$
C.
$\begin{array}{lccc}
  \text { Encumbrances Control (2008) } &21,000 \
 \text { Accounts payable } & &21,000
\end{array}$
D.
$\begin{array}{lccc}
  \text { Reserve for Encumbrances } &21,000 \
 \text { Encumbrances Control (2008) } & &21,000\
\text { Expenditures Control (2008) } &19,300 \
 \text {Accounts payable  } & &19,300\
\end{array}$

Quizplus · Accepted Answer

Choice A is incorrect because it does not record the receipt of the goods and supplies; it only records that the encumbrance from 2008 is being honored. 
Choice B is incorrect because it only reverses the reserve for encumbrances, but does not record the receipt of the goods and supplies. 
Choice C is incorrect because it only records the accounts payable, but does not record the reduction of the encumbrance. 
Choice D is the correct answer because it records the reduction of the encumbrance, the expenditure for the goods and supplies, and the resulting accounts payable.