Please Answer True or False

Use the following information when answering Questions 16 - 19 below. Suppose the City of Hammond Debt Service Fund is able to issue serial bonds worth $500,000 on October 1, 2019. Suppose that Hammond uses a fiscal year that runs from July 1, 2019 to June 30, 2020. Assume that the annual interest rate on this bond issue is 4%. Assume that the bonds are issued for 10 years and that principle is repaid evenly over the life of the bonds every six months (April 1 and October 1 each year). Also, assume that interest is paid on the outstanding principal on those dates as well. The first such payment date is April 1, 2020.

16. On April 1, 2020, the JE made on the DSF books should be

Expenditures - Bond Interest 10,000

Expenditures - Bond Principal 25,000

Cash 35,000

17. On April 1, 2020, the same JE would be made on the books for GA.

18. On June 30, 2020, no JE should be made related to the bond issue described on the books of the DSF.

19. On June 30, 2020, the following JE should be made for GA.

Interest Expense 10,000

Interest Payable 10,000