On April 1,2015,a local government issued bonds in the amount of $2,000,000. The bonds were issued at par and carried an interest rate of 5%,payable October 1 and April 1. When moving from the change in fund balances in the governmental funds Statement of Revenues,Expenditures,and Changes in Fund Balances to the change in Net Position in the governmental funds column of the Statement of Activities,both for the fiscal year ended June 30,2015,the effect for the interest accrual only would be:

Question

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Since the bonds were issued on April 1 and the interest is payable on October 1 and April 1, only three months of interest would have accrued by June 30. Therefore, the interest accrual for the fiscal year ended June 30, 2015 would be $2,000,000 x 5% x 3/12 = $25,000. This would be a decrease in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. When transferring this change to the governmental funds column of the Statement of Activities, it would also result in a decrease of $25,000 in the change in net position since both statements represent the same set of transactions.

On April 1,2015,a Local Government Issued Bonds in the Amount