Question

How would the Lincoln County Investment Trust Fund record the receipt of U.S. Treasury bonds transferred to it by the School District's debt service fund? (Recall that at the date of transfer the fair value of the bonds was $1,040,000 and the carrying value was $1,000,000.)

A) Credit Additions—Deposits in Pooled Investments—Lincoln School District for $1,000,000.
B) Credit Additions—Deposits in Pooled Investments—Lincoln School District for $1,040,000.
C) Debit Investments—U.S. Treasury Bonds for $1,000,000.
D) Both B and C are correct.

Answer 1

The Lincoln County Investment Trust Fund would record the receipt of U.S. Treasury bonds transferred to it by the School District's debt service fund by following option D) Both B and C are correct.

Step-by-step explanation:

The Lincoln County Investment Trust Fund would record the receipt of U.S. Treasury bonds transferred to it by the School District's debt service fund by following option D) Both B and C are correct.

Option B) Credit Additions—Deposits in Pooled Investments—Lincoln School District for $1,040,000 is correct because it reflects the fair value of the bonds at the date of transfer.

Option C) Debit Investments—U.S. Treasury Bonds for $1,000,000 is correct because it accounts for the carrying value of the bonds at the date of transfer.