Use the following to answer the next five questions:
On October 1, 2013, the City of Mizner issued $3,500,000 in 4%, general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $3,475,000 was used to construct the addition, which was completed prior to June 30, 2014. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2013, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $175,000 is due October 1, 2014. The fiscal year for Mizner is July 1- June 30.
-What would be the amount of debt service expenditures reported in the fiscal year ended June 30,2015?

Question

Quizplus · Accepted Answer

The amount of debt service expenditures would be the interest payment made on April 1, 2014 ($3,500,000 x 4% x 9/12) plus the first principal payment made on October 1, 2014 ($175,000). This would total $315,000 for the fiscal year ended June 30, 2015.

Answer: D
 The premium of $35,000 ([$3,500,000 x 101%] - $3,500,000) would be transferred to the debt service fund. The remaining $3,465,000 ($3,500,000 - $35,000) would be used for constructing the addition to City Hall.

Answer: $175,000
 The first of 20 annual principal payments of $175,000 is due on October 1, 2014.

Answer: October 1, 2013
 The bonds were dated October 1, 2013.

Answer: General obligation bonds
 The bonds issued by the City of Mizner were general obligation bonds.

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