On April 1, 2015, the City of Southern Ponds issued $3,500,000 in 4% general obl

Question

On April 1, 2015, the City of Southern Ponds issued $3,500,000 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 $3,490,000 was used to construct the police station, which was completed before December 31, 2015, the end of the fiscal year. The
remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2015, and paid interest on October 1 and April 1. The first of 20 equal annual principal
payments of $175,000 is due April 1, 2016.

What amount would be reported as debt service expenditures for 2015?
A) $ -0-
B) $ 70,000.
C) $140,000.
D) $245,000.
Answer: B

What amount would be reported as debt service expenditures for 2016?
A) $245,000.
B) $315,000.
C) $318,150.
D) $351,750.
Answer: B

how do you calculate the answers?

Explanation / Answer

Ans: Amount would be reported as debt service expenditures for 2015

             =3500000 x 4% x 1/2 year

             = $ 70000

Ans 2: Amount would be reported as debt service expenditures for 2016

             =3500000 x 4% + 175000

             = $ 315000

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.