What is the entry needed for recording receipt of materials and supplies with a total invoice of $820,300?

The best entry for recording the receipt of materials and supplies with a total invoice of $820,300 involves recognizing the expenditures related to the purchase, while also accounting for a possibility of prior budgetary controls and encumbrances.

When materials and supplies are received, the organization typically records the related expenditure, but if there were encumbrances in place for this purchase, it would be appropriate to reverse or clear those encumbrances upon receipt of the goods. This ensures that the financial records accurately reflect not only the current budgeted funding but also the actual commitments that have been incurred.

In the correct entry, debiting the Budgetary Fund Balance indicates that the budget has been utilized for this purchase, while crediting Encumbrances Control signifies that the prior commitment (the encumbrance) is being released now that the goods have been received. This process reflects adherence to proper governmental accounting practices, where the budget is monitored and actual expenditures are reconciled with encumbrances made previously.

The invoice amount of $820,300 must directly align with the entry to maintain accurate records, which acknowledges both the received materials and the financial implications of them on the budget. This entry serves to keep the organization’s accounting records in harmony with its budgetary management practices