Joined: 28 Jun 2010 Location: United States
Online Status: Offline Posts: 80
Posted: 14 Aug 2010 at 01:12 | IP Logged
Grove Township issued $50,000 of bond anticipation notes at face amount in 20X0 and placed the
proceeds into its capital projects fund. All legal steps were taken to refinance the notes, but Grove was
unable to consummate refinancing. In the capital projects fund, what account should be credited to
record the $50,000 proceeds?
a. Other financing sources control.
b. Revenues control.
c. Deferred revenues.
d. Bond anticipation notes payable.
CPA-01197 Explanation
Choice "d" is correct. The $50,000 proceeds of bond anticipation notes, when received in the capital
projects fund, should be credited to bond anticipation notes payable when the notes could not be
refinanced.
Can someone please explain what is the bond anticipation notes payable concept...Why are we not crediting Other Financing Sources as we do in case the proceeds are from bonds.
Joined: 01 Jun 2010
Online Status: Offline Posts: 63
Posted: 14 Aug 2010 at 14:43 | IP Logged
Because we record the $50,000, even though the $50,000 is not available until you have the ability to refinance. Until then, it should be recorded as a liability in the fund receiving the money. The notes are "anticipated", not realized. Small chance that you will see this on the exam.
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Topic: Governmental Accounting
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