Question

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:

Answer 1

Answer:

Tax Anticipation Note Payable

Explanation:

The journal entry to record the issuance of the tax anticipation note is shown below:

Cash Dr XXXXX

   To Tax Anticipation Note Payable XXXXX

(Being the issuance of the tax anticipation note is recorded)

For recording this transaction, we debited the cash account and credited the tax anticipation note payable