The city of Spartan's fiscal year ends on December 31.On September 1,2014,the city issued $1,000,000 of 6%,10-year term bonds with semi-annual interest payments due on March 1 and September 1 each year,beginning on March 1,2015.What amount of expenditures should the city recognize in its debt service fund for the years 2014 and 2015?

Question

Quizplus · Accepted Answer

The city should recognize $0 in 2014 because no interest payment is due until March 1, 2015. In 2015, the city should recognize $60,000 as expenditures for the two semi-annual interest payments of $30,000 each.

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