Question

On October 1, 2019, the City of Highland placed an order with Ajax Sand & Gravel Co. for 1,000 tons of cinders to be spread upon Highland’s streets during winter storms. The estimated cost of the cinders was $10 per ton, delivered. Ajax delivered 800 tons of cinders to Highland’s road maintenance yard on October 20, along with an invoice for $8,000. Ajax delivered the remaining 200 tons of cinders on November 1, along with an invoice for $2,000. Prepare the General Fund journal entries necessary on October 1, October 20, and November 1, 2019. Classify the expenditures as Road maintenance.

10/01
	To record encumbrance.
10/20
	To record partial reversal of encumbrance.
	To record expenditure.
11/01
	To record partial reversal of encumbrance.
	To record expenditure.

Answer 1

	Recording of Encumbrance
01-Oct	Encumbrances	Dr	10,000
	Reserve for Encumbrance			10,000
	Partial Reversal of Encumbrane
20-Oct	Reserve for Encumbrance	Dr	8,000
	Encumbrances			8,000
	Recording of Expenditure
20-Oct	Road Maintenance Exp.	Dr	8,000
	Accounts Payable			8,000
	Partial Reversal of Encumbrane
01-Nov	Reserve for Encumbrance	Dr	2,000
	Encumbrances			2,000
	Recording of Expenditure
01-Nov	Road Maintenance Exp.	Dr	2,000
	Accounts Payable			2,000