Just before the close of its fiscal year, a city government issues $2 million of bonds to finance the acquisition of capital assets. However, no part of the debt is repaid by year-end and no part of the debt is used to purchase capital assets. What adjusting entry is needed to prepare the city's government-wide financial statements from its fund-level financial statements

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Business

Moises Zamora

11 April, 15:07

Just before the close of its fiscal year, a city government issues $2 million of bonds to finance the acquisition of capital assets. However, no part of the debt is repaid by year-end and no part of the debt is used to purchase capital assets. What adjusting entry is needed to prepare the city's government-wide financial statements from its fund-level financial statements

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Carlos Mercado · Answer 1

Dr Other financing sources and uses - bonds issued 2,000,000

Cr Bonds payable - 2,000,000

Explanation:

The other financing sources and uses account includes all the transactions involving non-operating revenues/receipts and expenditures/disbursements, e. g. issuance of bonds.

Since the bonds were issued and the money was received, the city government must record the liability.