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

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The journal entry on September 15 to record the issuance of tax anticipation notes will include a credit to Tax Anticipation Notes Payable. This is because the town has borrowed $200,000 in anticipation of the property tax revenues which will be collected on December 1. The town will have to repay the tax anticipation notes in 90 days when the tax revenues are received. Therefore, the liability arising from the issuance of the tax anticipation notes is recorded as Tax Anticipation Notes Payable. Options A, B, and D are incorrect as they do not accurately reflect the transaction.

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