During the Previous Year, Bane County Closed Its Encumbrances Account

question 54

Multiple Choice

During the previous year, Bane County closed its Encumbrances account. At the end of the previous year there was $5,000 of outstanding purchase commitments. To restore these commitments to the accounts, which of the following entries would be required?

• A) Debit Reserve for encumbrances $5,000; Credit Encumbrances $5,000.
• B) Debit Encumbrances $5,000; Credit Reserve for encumbrances $5,000.
• C) Debit Encumbrances $5,000; Credit Fund balance $5,000
• D) Debit Fund balance $5,000; Credit Reserve for encumbrances $5,000.

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