How should a purchase order for materials and supplies costing $826,000 be recorded?

When a purchase order for materials and supplies is issued in governmental accounting, it is important to recognize that encumbrances represent commitments made against funds in the budget. This is done to ensure that resources are reserved for specific purposes, which helps in managing budgets effectively and prevents overspending.

By debiting Encumbrances Control, the transaction reflects the commitment of funds for the upcoming expense, which in this case is the amount of the purchase order for materials and supplies costing $826,000. The credit to Budgetary Fund Bal-Reserve for Encumbrances is appropriate because it indicates a reduction in the available budgetary resources, as those funds are now earmarked for that specific purchase.

This approach maintains accurate financial reporting and ensures that both the commitments and available resources are properly tracked in the governmental accounting system. The other choices do not correctly represent the nature of commitments made through a purchase order in the context of budgeting and encumbrance accounting.