Voters in Lincoln School District approved the construction of a new high school and approved an $8 million bond issue with a stated rate of interest of 6 percent to fund the construction. Bids were received, and the low bid was $8 million. When the bonds were issued, they sold for face value less bond underwriting fees of $0.5 million. The school board voted to fund the balance of the construction by a transfer from the general fund.
-The entry in the capital projects fund to record the additional funding for the construction should be
A) Debit Due from general fund $0.5 million; Credit Other financing sources-nonreciprocal transfer-in $0.5 million.
B) Debit Due from general fund $0.5 million; Credit Revenue $0.5 million.
C) Debit Cash $0.5 million; Credit Due to general fund $0.5 million.
D) Debit Other financing sources $0.5 million; Credit Due to general fund $0.5 million.

Question

Voters in Lincoln School District approved the construction of a new high school and approved an $8 million bond issue with a stated rate of interest of 6 percent to fund the construction.   Bids were received, and the low bid was $8 million.  When the bonds were issued, they sold for face value less bond underwriting fees of $0.5 million.   The school board voted to fund the balance of the construction by a transfer from the general fund.  
-The entry in the capital projects fund to record the additional funding for the construction should be
A) Debit Due from general fund $0.5 million; Credit Other financing sources-nonreciprocal transfer-in $0.5 million.
B) Debit Due from general fund $0.5 million; Credit Revenue $0.5 million.
C) Debit Cash $0.5 million; Credit Due to general fund $0.5 million.
D) Debit Other financing sources $0.5 million; Credit Due to general fund $0.5 million.

Quizplus · Accepted Answer

The correct entry to record the additional funding from the general fund is to debit "Due from general fund" for the amount being transferred ($0.5 million) and credit "Other financing sources-nonreciprocal transfer-in" for the same amount. This reflects the receipt of funds from another fund within the same government entity, which is not considered revenue but a transfer.

Voters in Lincoln School District Approved the Construction of a New