Question

The General Fund of the City of Castle Rock transfers $115,000 to the debt service fund for a $100,000 principal and $15,000 interest payment. The recording of this transaction would include:

Answer 1

The recording of the transfer would include a debit of $100,000 to the principal account, a debit of $15,000 to the interest account, and a credit of $115,000 to the General Fund.

Step-by-step explanation:

The recording of the transfer from the General Fund to the debt service fund would include:

1. A debit of $100,000 to the principal account in the debt service fund, representing the transfer of the principal payment.
2. A debit of $15,000 to the interest account in the debt service fund, representing the transfer of the interest payment.
3. A credit of $115,000 to the General Fund, reducing the balance in the General Fund by the amount transferred.