A Small Village (Which Keeps Its Records on a Calendar-Year

question 9

Short Answer

A small village (which keeps its records on a calendar-year basis)issued $1 million of bonds on April 1,2012.The first payment of principal was due April 1,2013,but interest at 6 percent per annum on the outstanding debt was due on October 1,2012 and April 1,2013.How much interest expenditure (expense)should the village recognize in its governmental fund and government-wide financial statements for the calendar year 2012? $\begin{array}{lll}&\text { Fund } & \text { Government-wide } \\&\text { Statements } & \text { Statement }\\\text { a. } & \$ 30,000 & \$ 30,000 \\\text { b. } & \$ 30,000 & \$ 45,000 \\\text { c. } & \$ 30,000 & \$ 60,000 \\\text { d. } & \$ 45,000 & \$ 45,000\end{array}$

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Definitions:

First-In, First-Out Method

An inventory valuation method where the items produced or purchased first are sold or used first.

Conversion Costs

The sum of labor and overhead costs necessary to convert raw materials into finished goods.

Direct Materials

Raw materials that are consumed in the manufacturing process and are directly incorporated into the finished product.

Weighted-Average Method

An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.