As of May 30,20X9,the debt service fund of Cody had accumulated $52,000 of assets in a debt service fund to pay the principal of its currently maturing serial bonds.On June 1,20X9,$50,000 of serial bonds matured and were paid with the resources accumulated in the debt service fund.In Cody's debt service fund,Matured Bonds Payable was debited for $50,000 and:

Question

Quizplus · Accepted Answer

When the bonds matured, they were paid with the resources accumulated in the debt service fund, which had $52,000 of assets specifically allocated for this purpose. Therefore, the Matured Bonds Payable account was debited for $50,000 to reflect the retirement of the debt, and the Cash account was credited for $50,000 to reflect the outflow of resources from the fund. Option B is incorrect because the Due to General Fund account would be credited when the debt service fund borrows money from the general fund, which is not the case here. Option C is incorrect because the debt service fund's investment activity does not directly affect this transaction. Option D is incorrect because the Reserve for Encumbrances account is used to track outstanding purchase orders and other commitments, not bond payments.

As of May 30,20X9,the Debt Service Fund of Cody Had