Food for All (FFA)is a Not-For-Profit Organization That Has Grown

Food for All (FFA)is a not-for-profit organization that has grown to be quite large. FFA operates 25 food banks in multiple locations throughout the province and has moved to a decentralized organizational structure. All of the funding is received by the head office and then each location is allocated a fixed amount of funds that can be used over the year for local expenses. Local expenses are at the discretion of the local managers. The board has decided to change its method of accounting to keep better track of costs at these various locations and to better manage the budget. The board has decided to implement a new budgeting and encumbrance accounting system.
Required:
1. In October 20X9, FFA issued a purchase order for $35,000 to have 100,000 pamphlets printed to be distributed to households over the next six months. In December 20X9, the pamphlets were received along with an invoice for $33,900. Prepare the journal entries for October and December 20X9 using encumbrance accounting.
2. Identify when encumbrance reporting would be appropriate. Comment as to whether or not encumbrance reporting is appropriate for FFA.