Chapter 4, Problem 18EP

During the current year, the City of Hickory Hills issued purchase orders to various vendors in the amounts shown for the following functions of the city:

All goods ordered during the year were received at the following actual costs:

Required

1. a.      Prepare a summary journal entry in the General Fund general journal to record the issuance of purchase orders. In addition, show subsidiary detail for the Encumbrances ledger.
2. b.      Prepare summary journal entries in the General Fund general journal to record the receipt of and payment for goods during the year. In addition, show subsidiary detail for the Encumbrances and Expenditures ledgers.
3. c.       Does the fact that the actual cost of goods received during the year exceeded the estimated cost when ordered suggest a budgetary or management problem?