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The voters in Ohio City approved the construction of a new city hall building and approved a $10 million bond issue with a stated rate of interest of 6% to fund the construction.When the bonds were issued, they sold for 99.Assuming that the City's has agreed to transfer money from its General Fund to make up the difference, what are appropriate entries related to the discount?
-In the debt service fund
A)Debit Cash $100.000; Credit Revenues $100,000; no other entries required.
B)Debit Cash $100,000; Credit Other financing sources-transfer $100,000; No other entries required.
C)Debit Other financing sources-transfer $100,000; credit Cash $100,000.
D)No entry in the Debt Service Fund.

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Use the following information to answer question 
The voters in Ohio City approved the construction of a new city hall building and approved a $10 million bond issue with a stated rate of interest of 6% to fund the construction.When the bonds were issued, they sold for 99.Assuming that the City's has agreed to transfer money from its General Fund to make up the difference, what are appropriate entries related to the discount?
-In the debt service fund
A)Debit Cash $100.000; Credit Revenues $100,000; no other entries required.
B)Debit Cash $100,000; Credit Other financing sources-transfer $100,000; No other entries required.
C)Debit Other financing sources-transfer $100,000; credit Cash $100,000.
D)No entry in the Debt Service Fund.

Quizplus · Accepted Answer

The discount on the bond issuance is typically handled in the capital projects fund or the general fund, not the debt service fund. The debt service fund is used for paying interest and principal on the debt, not for recording the issuance of the bonds or any related discounts.

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