On June 1, Brooksville levied special assessments totaling $500,000 payable in 10 equal installments beginning June 30. In the debt service fund's June 1 entry, which of the following would be recorded?

• A. Debit Cash for $50,000.
• B. Debit Assessments Receivable—Current for $50,000.
• C. Debit Assessments Receivable—Current for $25,000.
• D. Debit Assessments Receivable—Long-Term for $50,000.

Answer: (B)

The key idea is how a debt service fund handles special assessments that will be paid in installments. When a levy is made, the fund records a receivable for the portion of the assessment that is expected to be collected in the near term, rather than recognizing cash until it’s actually received. Since the assessments total 500,000 to be paid in 10 equal installments beginning June 30, only the first installment is due in the near term (June 30). That amount is 50,000, so the fund records a current receivable for 50,000. No cash is received yet, hence no debit to Cash. The other options would imply cash collection or a long-term receivable for an amount that is due in the current period, which isn’t appropriate here.