The county issued a six-month, 6%, $200,000 bond anticipation note on October 1, 20X7, to provide temporary financing for a police station construction project. The voters have not approved the bonds, but approval is expected before year-end. The county government was billed $150,000 during the year for construction costs on its capital project and $125,000 was paid. The government should report Capital Projects Fund expenditures for the year ended December 31, 20X7 of

Question

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The Capital Projects Fund expenditures include all costs associated with the construction project during the fiscal year, regardless of payment status. Therefore, the total expenditures for the project for the year ended December 31, 20X7 would be $150,000 (billed) + $3,000 (interest expense from October 1 to December 31, 20X7: $200,000 x 6% x 3/12) = $153,000. The fact that the financing is in the form of a bond anticipation note and has not yet been approved by the voters is not relevant to the calculation of the expenditures. The payment of $125,000 is only a part of the total expenditures, but it does not affect the amount to be reported.

The County Issued a Six-Month, 6%, $200,000 Bond Anticipation Note