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 issuance of bonds. The county government was billed $150,000 during the year for construction costs on its capital project and $125,000 was paid. If the bond referendum is not approved by the voters, the government should report Capital Projects Fund expenditures for the year ended December 31, 20X7 of

Question

Quizplus · Accepted Answer

The county issued a bond anticipation note to provide temporary financing for a police station construction project, and $150,000 was billed during the year for construction costs on its capital project. However, only $125,000 was paid.

Therefore, the capital projects fund expenditure for the year ended December 31, 20X7, would be $153,000 ($150,000 for construction costs billed + $3,000 in interest expense [$200,000 x 6% x 3/12], since the note was issued on October 1 and the year ended on December 31) minus $125,000, which was the amount paid.

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