Use the Following Information to Answer Question

question 21

Multiple Choice

Use the following information to answer question
The voters in Ohio City approved the construction of a new city hall building and approved a $10 million bond issue with a stated rate of interest of 6% to fund the construction.When the bonds were issued, they sold for 99.Assuming that the City's has agreed to transfer money from its General Fund to make up the difference, what are appropriate entries related to the discount?
-In the debt service fund

• A)Debit Cash $100.000; Credit Revenues $100,000; no other entries required.
• B)Debit Cash $100,000; Credit Other financing sources-transfer $100,000; No other entries required.
• C)Debit Other financing sources-transfer $100,000; credit Cash $100,000.
• D)No entry in the Debt Service Fund.

---

Definitions:

Financing Activities

Transactions and events where a business raises funds to support its operations and expansions, typically involving debt or equity.

Issuing Debt

The process by which a company or governmental entity raises funds by selling bonds, notes, or other financial instruments to creditors.

Cash Dividends

Payments made by a corporation to its shareholder members from its current or retained earnings.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.