Question

Prior to the receipt of the bond proceeds, Oxford needed funds and went to United Southern Bank to borrow $600,000 in bond anticipation notes (BANs), at 5 percent, which were to be paid back using the proceeds of the $2,500,000 bond issue. The entry at the government-wide level to record the receipt of the bond anticipation notes would include a: A. Credit to Other Financing Sources—proceeds of BANs, $600,000. B. Debit to Cash, $1,900,000. C. Credit to Bonds Payable, $600,000. D. Debit to Cash, $600,000.

Answer 1

Answer:

D. Debit to Cash, $600,000.

Explanation:

The journal entry is shown below:

Cash Dr $600,000

    To Bond anticipated note payable $600,000

(Being the receipt of the bond is recorded)

For recording this we debited the cash as it increased the asset and credited the bond anticipated note payable as it also increased the liabilities so that the correct posting could be done