Chapter 16, Problem 13P

A purchase order for $3,000 is recorded in the general fund for the purchase of a new computer. The computer is received at an actual cost of $3,020. Which of the following statements is correct?

1. a. Machinery is increased in the general fund by $3,020.
2. b. An encumbrance account is reduced by $3,020.
3. c. An expenditure is increased by $3,020.
4. d. An expenditure is recorded for the additional $20.