The City of Hiawatha Issued $10 Million of Term Bonds

question 3

Multiple Choice

The City of Hiawatha issued $10 million of term bonds as of April 1, 2017. The bonds bear interest at 6 percent, due and payable each October 1 and April 1. Assuming the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements the appropriate entity to record interest on the debt at June 30, 2018 (the city's fiscal year-end) is

• A) Debit Expenditures $300,000; Credit Interest payable $300,000.
• B) Debit Expenditures $300,000; Credit Other financing uses $300,000.
• C) Debit Expenditures $300,000; Credit Due to bondholders $300,000.
• D) No entry required.

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