A certain federal agency placed an order for office supplies at an estimated cost of $14,400.Later in the same fiscal year these supplies were received at an actual cost of $14,800.Assume commitment accounting is not used by this agency.When the order is placed the required journal entry (or entries)will affect the accounts shown in what net amounts?

Question

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When the order is placed, only budgetary accounts will be affected with an estimated cost of $14,400. Since commitment accounting is not used, no entry will be made in the proprietary accounts until the supplies are actually received. Therefore, the proprietary accounts will remain at $0 until the actual cost of $14,800 is recorded upon receipt of the supplies. Thus, the net amount affected in the budgetary accounts is $14,400, whereas in the proprietary accounts it is $0.

A Certain Federal Agency Placed an Order for Office Supplies