A city keeps its books on a calendar-year basis. On April 1, 2019, the city sold $500,000 of 6% general obligation bonds, payable in semi-annual installments. The first installment, due October 31, 2019 covered interest of $15,000 and principal of $25,000. For the year ended December 31, 2019, how much should the Debt Service Fund report as expenditures?

Question

Quizplus · Accepted Answer

The expenditure for debt service for year ended December 31, 2019 is $40,000. It is comprised of a $25,000 expenditure for bond principal and a $15,000 expenditure for bond interest. The second installment on the bonds is not due until April 1, 2020.

A City Keeps Its Books on a Calendar-Year Basis