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A city sells $5 million of 6% ten-year general obligation bonds on April 1, 2022....

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Accounting

A city sells $5 million of 6% ten-year general obligation bonds on April 1, 2022. The first installment of debt principal ($250,000) is due to be paid on September 30, 2022. What entry should the city make on September 30, 2022 in the Debt Service Fund regarding the bond principal? Select one: a. It should reduce the $5 million long-term liability by $250,000. b. It should do nothing in the Debt Service Fund, but it should reduce Bonds payable by $500,000 in the Capital Projects Fund c. It should make no entry anywhere until the principal is actually paid. d. It should recognize a $250,000 liability for Matured bonds payable.

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