Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $90,000 plus interest on the unpaid balance at 6%.Annual principal payment of $30,000, plus interest, are due each July 1.Assuming that the District maintains its books and records in a manner that facilitates the preparation of the government-wide financial statements, the appropriate entry at the date of acquisition is

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The appropriate entry for the acquisition of a new school bus is to debit Fixed Assets for the cost of the bus, which in this case is $90,000. The credit entry would be for the liability that was incurred by signing the note for $90,000, which is the Notes Payable account. Therefore, the correct entry is to Debit Fixed Assets for $90,000 and Credit Notes Payable for $90,000.

Pocahontas School District, an Independent Public School District, Financed the Acquisition