The City of Spartan's fiscal year ends on December 31. On October 1, 2020, the city issued $1,000,000 of 6%, 10-year term bonds with semiannual interest payments due on April 1 and October 1 each year, beginning on April 1, 2021. What amount of expense should the city recognize in its governmental activities journal for the years 2020 and 2021?

Question

Quizplus · Accepted Answer

The city should recognize $15,000 in 2020 for the interest accrued from October 1 to December 31, 2020, and $60,000 in 2021 for the full year's interest.

The City of Spartan's Fiscal Year Ends on December 31