The City issued $2 million in general obligation bonds to acquire a fleet of vehicles for the Central Motor Pool Internal Service Fund.At the date of issue, the appropriate entry in the Internal Service Fund is a $ 2 million debit to cash and a $2 million credit to

Question

Quizplus · Accepted Answer

When the City issued $2 million in general obligation bonds, they incurred a long-term debt that needs to be recorded in their books. The appropriate entry in the Internal Service Fund is a $2 million debit to cash and a $2 million credit to Bonds payable, which will represent the amount of the debt owed by the City. Choice B is incorrect because Capital contribution Revenues are typically used to denote contributions made by the City or other agencies to a fund, which is not the case with the bond issuance. Choice C is incorrect because the entry should not be split between Capital contributed Revenues and the Schedule of Changes in Long-term Obligations, as this would not be clear and could lead to confusion. Choice D is incorrect because not recording the bond issuance in the proprietary fund would not accurately reflect the City's financial position.

The City Issued $2 Million in General Obligation Bonds to Acquire