A county accounts for its debt service payments in the General Fund. The amount of unmatured, unpaid interest on general long-term liabilities at the beginning of the year was $122,000 (listed on the LTL Schedule). The ending balance was $165,000. The General Fund also made principal payments of $600,000 and interest payments of $150,000 during the year. The General Fund should report expenditures for debt service for the year of:

$150,000

$722,000

$750,000

$793,000

Question

Business

Emiliano Wilkinson

20 November, 11:04

A county accounts for its debt service payments in the General Fund. The amount of unmatured, unpaid interest on general long-term liabilities at the beginning of the year was $122,000 (listed on the LTL Schedule). The ending balance was $165,000. The General Fund also made principal payments of $600,000 and interest payments of $150,000 during the year. The General Fund should report expenditures for debt service for the year of:

$150,000

$722,000

$750,000

$793,000

+2

Answers (1)

Know the Answer?

Jensen Baxter · Answer 1

The correct option is $750,000

Explanation:

A county uses the modified accrual basis of accounting for revenue and expenditure which implies that revenue and expenditure do not show up in the county's books of accounts except for those ones actually received and paid in the period under consideration.

As a result, the expenditures for the debt service year are those actually paid which comprises of the principal repayment of $600,000 and interest payment of $150,000, totalling $750,000 ($600,000+$150,000)