Question

During January 2014 General Fund supplies ordered in the previous fiscal year and encumbered at an estimated amount of $2,000 were received at an actual cost of $2,200. The entry to record this transaction will require a debit to

a. Expenditures-2013 in the amount of $200
b. Expenditures-2013 in the amount of $2,200
c. Expenditures-2014 in the amount of $2,200
d. Expenditures-2014 in the amount of $200

Answer 1

The correct option is C). The correct entry to record the supplies received is a debit to Expenditures-2014 in the amount of $2,200, reflecting when the expense is actually incurred.

Step-by-step explanation:

The correct answer to the question is option c, Expenditures-2014 in the amount of $2,200. In accounting, particularly in governmental accounting, when supplies ordered in the previous fiscal year are received in the next fiscal year, the actual cost is recognized in the fiscal year they are received. As the supplies were ordered and encumbered in the previous year for $2,000 but received in January 2014 at an actual cost of $2,200, the entry in January 2014 would debit the expenditures for 2014, since that is when the expense is actually incurred. This accounts for the entire actual cost of the supplies received, not just the difference.