Question

queens city has outstanding $5 million in general obligation term bonds used to finance the construction of the new city library. sue city has a june 30 fiscal year-end. interest at 12% is payable each january 1 and july 1. the principal of the bonds is due 10 years in the future. the city budgeted the july 1, 2020 interest payment in the budget for the fiscal year ended june 30, 2020. on june 30, cash was transferred from the general fund to the debt service fund to make the required payment. the maximum amount of interest payable that may be included on the balance sheet of the debt service fund of sue city at june 30 would be 150k 0k 300k 3k

Answer 1

The maximum amount of interest payable that may be included on the balance sheet of the debt service fund of sue city on June 30 would be 150k.

the maximum amount of interest payable on the balance sheet = 5000000×6%/2 = 150000

In finance and economics, interest is payment from a borrower or deposit-taking economic group to a lender or depositor of a quantity above compensation of the major sum (this is, the amount borrowed), at a particular rate. it's miles awesome from a charge that the borrower may additionally pay the lender or some 0.33 celebration. it is also wonderful from a dividend that is paid with the aid of an enterprise to its shareholders (proprietors) from its income or reserve, but no longer at a selected price decided beforehand, alternatively on a pro-rata foundation as a percentage within the praise gained through hazard taking marketers whilst the sales earned exceeds the whole fees.

As an example, a patron might generally pay interest to borrow from a financial institution, so they pay the financial institution a quantity that is more than the amount they borrowed, or a customer can also earn interest on their savings, and so they'll withdraw greater than they at first deposited. In the case of financial savings, the customer is the lender, and the financial institution performs the role of the borrower.

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