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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% 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 $.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 would be
A)Debit Due from general fund $.5 million; Credit Other financing sources-transfer $.5 million.
B)Debit Due from general fund $.5 million; Credit Revenue $.5 million.
C)Debit Cash $.5 million; Credit Due to general fund $.5 million.
D)Debit Other financing sources $.5 million; Credit Due to general fund $.5 million.

Question

Use the following information to answer questions 
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% 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 $.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 would be
A)Debit Due from general fund $.5 million; Credit Other financing sources-transfer $.5 million.
B)Debit Due from general fund $.5 million; Credit Revenue $.5 million.
C)Debit Cash $.5 million; Credit Due to general fund $.5 million.
D)Debit Other financing sources $.5 million; Credit Due to general fund $.5 million.

Quizplus · Accepted Answer

The correct answer is A because the entry to record the additional funding for the construction would be to debit Due from general fund for $0.5 million and credit Other financing sources-transfer for $0.5 million. This is because the school district is receiving $0.5 million from the general fund to help fund the construction of the new high school.

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