Question

Trapper City issued 30-year bonds for the purpose of building a new City Hall. The proceeds of the bonds are deposited in the General Fund. For the Fund Financial Statements, in what fund will Bonds Payable appear?

A. General Fund.
B. Capital Projects Fund.
C. Permanent Fund.
D. Debt Service Fund.
E. Bonds Payable do not appear in Fund Financial Statements.

Answer 1

In the Fund Financial Statements, Trapper City's Bonds Payable will appear in the Capital Projects Fund, used for the construction of major capital facilities.

Step-by-step explanation:

When Trapper City issued 30-year bonds to build a new City Hall, for the Fund Financial Statements, the Bonds Payable will appear in the Capital Projects Fund. This fund is used to track financial resources that are used for the acquisition or construction of major capital facilities. The General Fund is used for day-to-day operations, the Debt Service Fund is used to accumulate resources for paying interest on and principal of general long-term debts, but only the Capital Projects Fund would typically be used to account for bond proceeds used for a specific capital asset, like a City Hall.