Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng

Exercise 16

General obligation bonds, fixed asset construction. Select the best response for each of the following multiple-choice questions that refer to the transactions of Beloit City. (No. 4 is AICPA adapted.) On March 2, 2018, Beloit City issued 10-year general obligation bonds at face amount, with interest payable onMarch 1 and September 1. The proceeds were to be used to finance the construction of a civic center over the period of April 1, 2018, to March 31, 2019. During the
fiscal year ended June 30, 2018, no resources had been provided to the debt service fund for the
payment of principal and interest.
1. On June 30, 2018, Beloit's debt service fund should include interest payable on the general
obligation bonds for
a. zero months.
b. three months.
c. four months.
d. six months.
2. Proceeds from the general obligation bonds should be recorded in the
a. general fund.
b. capital projects fund.
c. general long-term debt account group.
d. debt service fund.
3. The liability for the general obligation bonds should be recorded in the
a. general fund.
b. capital projects fund.
c. general long-term debt account group.
d. debt service fund.
4. On June 30, 2018, the balance sheet part of Beloit's fund financial statements should report the construction in progress for the civic center in the