The Khoo Music Society, a Not-For-Profit Organization, Is Purchasing Musical

Multiple Choice

The Khoo Music Society, a not-for-profit organization, is purchasing musical instruments to donate to some local schools. Khoo ordered the instruments on August 1, 20X1. Khoo uses an encumbrance system. What journal entry should Khoo make at August 1, 20X1?

A) $$\begin{array} { | c | c | } \hline \text { DR Encumbrances-instruments } & 20,000 \\\hline \text { CR Estimated commitments } & 20,000 \\\hline\end{array}$$
B) $$\begin{array} { | l | c | } \hline \text { DR Encumbrances-instruments } & 20,000 \\\hline \text { CR Accounts payable } & 20,000 \\\hline\end{array}$$
C) $$\begin{array} { | l | c | } \hline \text { DR Estimated commitments } & 20,000 \\\hline \text { CR Encumbrances-instruments } & 20,000 \\\hline\end{array}$$
D) $$\begin{array} { | c | c | } \hline \text { DR Estimated commitments } & 20,000 \\\hline \text { CR Accounts payable } & 20,000 \\\hline\end{array}$$