Use the following to answer the next four questions:
On April 1, 2014, the City of Southern Ponds issued $4,000,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,990,000 was used to construct the police station, which was completed before December 31, 2014, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2014, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $200,000 is due April 1, 2015.
-What amount would be reported as debt service expenditures for 2014?

Question

Quizplus · Accepted Answer

The debt service expenditures for 2014 would include only the interest payment made on October 1, 2014, which is $80,000 (4% of $4,000,000 for six months). The principal payment is not due until April 1, 2015.

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