Calhoun County makes annual transfers from the general fund to the debt service fund to pay principal and interest on long-term debt.
-In the debt service fund, what is the appropriate entry when the principal payment is made?
A) Debit Bonds payable; Credit Cash.
B) Debit Expenditures; Credit Cash.
C) Debit Other financing uses-nonreciprocal transfer-out; Credit Cash.
D) No entry is required.

Question

Quizplus · Accepted Answer

When the principal payment is made from the debt service fund, the appropriate entry is to debit Expenditures and credit Cash. This reflects the use of current financial resources to pay down the principal on long-term debt.

Calhoun County Makes Annual Transfers from the General Fund to the Debt