The general fund of Loveland ordered a new fire truck on November 12,2008,for $150,000.The order was appropriately encumbered on this date.Loveland received the fire truck on January 15,2009,and issued a voucher to the manufacturer for $148,600.Loveland uses the calendar year for reporting,and outstanding encumbrances at December 31,2008,are lapsing.On January 15,2009,the general fund of Loveland should debit:

Question

Quizplus · Accepted Answer

The correct entry to record the receipt of the fire truck on January 15, 2009, is to debit the Expenditures account for the amount paid, which is $148,600. The encumbrance made in November 2008 was merely an estimate of the amount to be spent and is no longer relevant since the actual amount has now been determined. Fund Balance-Reserved for Encumbrances is only used to record outstanding encumbrances, which is not applicable in this scenario. Expenditures-2008 is not a proper account since it is not a distinct fund or category of expenditure. Encumbrances are also no longer relevant in this transaction.

The General Fund of Loveland Ordered a New Fire Truck