Use the Following to Answer the Next Five Questions

question 81

Multiple Choice

Use the following to answer the next five questions:
On October 1, 2011, the City of Mizner issued $3,500,000 in 5%, general obligation bonds at 102 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $3,450,000 was used to construct the addition, which was completed prior to June 30, 2012. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2011, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $175,000 is due October 1, 2012. The fiscal year for Mizner is July 1- June 30.
-In addition to a capital asset in the government-wide Statement of Net Assets,how would the construction costs of $3,450,000 be reported at year-end?

• A) As an expenditure of the capital projects fund and an expense in the Statement of Activities.
• B) As an expenditure of the capital projects fund only.
• C) As a capital asset in the Statement of Net Assets only.
• D) As an expenditure of the capital projects fund and a capital asset in the government-wide Statement of Net Assets.

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Definitions:

Withholding Allowance

A determination used to calculate the amount of federal income tax to withhold from an employee's paycheck.

Gross Earnings

The total amount of money earned by an individual or a company before any deductions or taxes are applied.

Taxable Income

The amount of an individual's or a corporation's income used to determine how much tax is owed to the government.

Withholding Allowance

A tax term referring to an exemption that reduces how much income tax an employer deducts from an employee's paycheck.