On July 1,the first day of its fiscal year,the Town of Eldon levied a $1,000,000 property tax which is payable in full on December 1 of the same year.On September 15,the town decided to borrow $200,000 in 90-day tax anticipation notes to cover operating expenditures until the tax revenues are collected.The journal entry on September 15 to record the issuance of tax anticipation notes will include:

Question

Quizplus · Accepted Answer

The journal entry to record the issuance of tax anticipation notes will include a credit to Tax Anticipation Notes Payable, which is a liability account representing the amount borrowed by the town. Option A and D are incorrect because they refer to the source of funds or the impact on future financial statements, which are not relevant to the journal entry at hand. Option B is incorrect because Tax Anticipation Revenue is recognized when cash is received from taxpayers in the future, not when the town borrows money.

On July 1,the First Day of Its Fiscal Year,the Town