We need to encumber $1,000 that we plan to pay to an artist who is creating a mural. This allows us to set aside the money in our account to keep track of this $1,000 expense that is to be charged to account 1031400 in the future.
In this example we have not included a reversal date. This means that rather than having the KFS automatically remove this encumbrance on a future date, the user has to disencumber the account by processing another PE document.
The General Ledger Pending Ledger Entries tab shows that these entries are made in balance type PE (Pre-Encumbrance). This marks the entries as being distinct from other balance types such as 'Actuals (AC)' or 'Current Budget (CB)'.