Rand city entered into the following transaction during the current year. Requir

Question

Rand city entered into the following transaction during the current year. Required: Assum that the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements. Prepare entries to record the following transactions. Indicate the fund in which the entry is being made.

a) The city issues $2 million of tax anticipation notes, backed by property taxes that will be recorded in the general fund.

b) The city issues $2 million of 90-day bond anticipation notes that it expects to roll over into long-term bonds.

c) The city repays the $5 million in (a) plus $0.12 million in interest.

d) The city sucessfully issues $20 million in long-term bonds and repays the notes in (b).

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Fund - General Fund

Journal Entry:

Cash Dr. 2 million

Tax Anticipation Notes Payable Cr. 2 million

Part B:

Fund - Capital Projects Fund

Journal Entry:

Cash Dr. 2 million

Other Financing Sources - Proceeds of BAN's Cr. 2 million

Part C:

Fund - General Fund

Journal Entry:

Tax Anticipation Notes Payable Dr. 5million

Debt Service Expenditure - Interest Dr. .12 million

Cash (5 +.12) Cr. 5.12 million

Part D:

Fund - Capital Projects Fund

Journal Entry:

Cash Dr. 20 million

Other Financing Sources - Bond Proceeds Cr. 20 million

Other Financing Sources - Repay BANs Dr. 2million

Cash Cr. 2million

Thanks.

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