Elm City issued a purchase order for supplies with an estimated cost of $5,000. When the supplies were received, the accompanying invoice indicated an actual price of $4,950. What amount should Elm debit (credit) to the budgetary fund balance account after the supplies and invoice is received?

$5000.

Explanation:

Here in the journal, its entries are:

When the purchase order was issued:

Debit (Dr)Credit (Cr)

Encumbrances (estimated)

$5,000

Budgetary control $ 5,000

When the supplies and invoice are received:

Debit (Dr)Credit (Cr)

Budgetary control$ 5,000

Encumbrances $ 5,000

Expenditures (actual)4,950

Vouchers payable 4,950

When supplies and invoice have been received, Elm should debit the internal account for budgetary control for the same $5,000 estimated amount that the account was credited when the purchase order was issued.

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