A County Government Borrows $1,500,000 from a Local Bank at the Beginning

Multiple Choice

A county government borrows $1,500,000 from a local bank at the beginning of 2019, to fund general operations. Principal and $90,000 in interest ($45,000 per year) are both due two years later when the loan is repaid at the end of 2020. The loan is reported in the general fund. Which statement below is true concerning the general fund?

A) Fund balance is not affected in 2019.
B) Fund balance is reduced by $45,000 in 2019.
C) Fund balance decreases by $1,500,000 in 2020.
D) Fund balance decreases by $1,590,000 in 2020.