On April 1, 2019, Houghton City issued 10-year, 3 percent serial, general obligation bonds at a face amount of 2,000,000. Interest is due semi-annually on April 1 and October 1. The first payment of $200,000 for redemption of principal is due April 1, 2020. The city has a calendar year end of December 31. Record the interest that should be recognized for the calendar year end December 2019 in two ways: first, for the governmental activities on the government-wide statement of activities, and second, for the General Fund on the statement of revenues, expenditures, and changes in fund balance. Assume cash is paid on the day interest is due. Show your calculations. Explain why interest expense is treated differently in those two statements. Date Account Name Debit Credit
On April 1, 2019, Houghton City issued 10-year, 3 percent serial, general obligation bonds at a face amount of 2,000,000. Interest is due semi-annually on April 1 and October 1. The first payment of $200,000 for redemption of principal is due April 1, 2020. The city has a calendar year end of December 31. Record the interest that should be recognized for the calendar year end December 2019 in two ways: first, for the governmental activities on the government-wide statement of activities, and second, for the General Fund on the statement of revenues, expenditures, and changes in fund balance. Assume cash is paid on the day interest is due. Show your calculations. Explain why interest expense is treated differently in those two statements. Date Account Name Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 8RE
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