Pocahontas School District, an Independent Public School District, Financed the Acquisition

question 14

Multiple Choice

Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $105,000 plus interest on the unpaid balance at 6 percent. Annual principal payments of $35,000, plus interest, are due each July 1. Assuming that the district maintains its books and records in a manner that facilitates the preparation of the fund financial statements, the appropriate entry in the general fund at the date of acquisition is

• A) Debit Expenditures $105,000; Credit Notes payable $105,000.
• B) Debit Capital assets $105,000; Credit Notes payable $105,000.
• C) Debit Expenditures $105,000; Credit Other financing sources $105,000.
• D) Debit Capital assets $105,000; Credit Other financing sources $105,000.

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Definitions:

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