During January 2017 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-2017 in the amount of $2,200.

B. Expenditures-2016 in the amount of $200.

C. Expenditures-2017 in the amount of $200.

D. Expenditures-2016 in the amount of $2,200.

Question

Business

Bryce Cain

7 November, 17:21

During January 2017 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-2017 in the amount of $2,200.

B. Expenditures-2016 in the amount of $200.

C. Expenditures-2017 in the amount of $200.

D. Expenditures-2016 in the amount of $2,200.

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Answers (1)

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Abraham Abbott · Answer 1

The correct answer is:

Expenditures-2017 in the amount of $200. (C.)

Explanation:

This scenario describes a record that was less than the actual amount spent on the General Fund supplies. The amount recorded was $2,000, meanwhile the actual amount spent was $2,000. This entails that an amount worth $200 was not recorded, hence it will be debited as expenditures, but the question now is where the debit will be recorded?

This review was done in January 2017, meaning that the income statement for the 2016 Fiscal year must have been balanced, hence the amount will be an expenditure recorded in 2017, but the particulars will have a description that it was a carried over expenditure from 2016. Therefore $200 will be debited from 2017 as expenditures.