Appropriations, Encumbrances, and Expenditures. The finance director of the Town of Liberty has asked you to determine whether the appropriations, expenditures, and encumbrances comparison for Office Supplies for a certain year (reproduced as follows) presents the information correctly. You determine that the General Fund chart of accounts describes office supplies as “tangible items of relatively short life to be used in a business office.” You also determine that the transfer of stationery, at cost, to the town water utility was properly authorized; the Water Utility Fund is to pay the General Fund $330 for the supplies. The transfer of $46,000 from Office Supplies to Personal Services was made by an accounting clerk, without the knowledge of managers, to avoid reporting that the Personal Services appropriation had been over expended.
Required
To determine whether the following budgetary comparison is correct, you need to compute each of the following. Organize and label your computations so the finance director can understand them.
a. The final amended amount of the appropriation for Office Supplies for the year.
b. The valid amount of encumbrances outstanding against this appropriation at the end of the year.
c. The net amount of expenditures made during the year that were properly chargeable to this appropriation.
d. The unencumbered unexpended balance of this appropriation.
TOWN OF LIBERTY General Fund Appropriation, Expenditures, and Encumbrances
Encumbrances
Purchase No.
Explanation
Appropriations
Debits
Credits
Expenditures
Available Balance
Budget legally approved
62,200
350
Purchase order—computer paper
600
61,600
356
Purchase order—stationery
420
62,020
Refund of prior year expenditure
30
62,050
370
Purchase order—filing supplies
400
61,650
Invoice
605
61,045
378
Purchase order—computer
3,160
57,885
380
Contract for washing office windows
2,000
55,885
Cost of stationery issued to
town’s water utility
330
56,215
Refund on P.O. 350
10
56,225
425
55,800
53,000
385
Purchase order—furniture
7000
46,000
Transfer to Personal Services
appropriation
(46,000)
0
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