The City of Burlington borrowed $350,000 via a tax anticipation note. If the city repaid the note three months later, the General Fund entry to record the repayment and interest of $2,750 will include

Question

The City of Burlington borrowed $350,000 via a tax anticipation note.  If the city repaid the note three months later, the General Fund entry to record the repayment and interest of $2,750 will include

Quizplus · Accepted Answer

The repayment of the tax anticipation note involves two parts: repaying the principal amount borrowed and paying the interest. The city needs to debit the Tax Anticipation Notes Payable account for the full amount borrowed ($350,000) and debit the Expenditures account for the interest paid ($2,750). Therefore, the correct entry would be a debit to Tax Anticipation Notes Payable for $350,000 and a debit to Expenditures for $2,750. Choice D is the only one that includes both required debits.

The City of Burlington Borrowed $350,000 Via a Tax Anticipation