The Village of Walton Borrowed $500,000 for a Period of Six

Short Answer

The Village of Walton borrowed $500,000 for a period of six months using a tax anticipation note on November 1, 2019. The Village is charged interest on the borrowing at annual rate of 6 percent. The Village's fiscal year-end is September 30, 2020. What journal entry should be made in the Village's General Fund when the Village repays the loan with interest on April 30, 2020?
a.
$\begin{array}{lll}\text { Expenditures-notes principal } & 500,000 \\\text { Expenditures-interest } & 30,000 \\\text { Cash } &&530,000\end{array}$

b.
$\begin{array}{lll}\text { Expenditures-notes principal } & 500,000 \\\text { Expenditures-interest } & 15,000 \\\text { Cash } &&515,000\end{array}$

c.
$\begin{array}{lr}\text { Tax anticipation notes payable } & 500,000 \\\text { Expenditures-interest } & 30,000\\\text { Cash } &&530,000\end{array}$

d.
$\begin{array}{lr}\text { Tax anticipation notes payable } & 500,000 \\\text { Expenditures-interest } & 15,000\\\text { Cash } &&515,000\end{array}$