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welcome1100
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Joined: 28 Jun 2010
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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.

 

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nipson
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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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