In anticipation of issuing of long-term bonds, a state issues on May 1, 2015 $200 million of 60-day BANs to finance highway construction. It expects to roll over the BANs into long-term bonds within 60 days. Its fiscal year ends on May 31. The state issues its financial statements approximately four months after the end of its fiscal year.
1. Prepare the appropriate journal entry in a governmental fund (such as a capital projects fund) to record the issuance of the $200 million, 60-day BANs on May 1, 2015.
2. Prepare the appropriate journal entry, if required, to record the conversion of the BANs to long-term bonds on June 18, 2015.
3. Prepare the appropriate journal entry, if required, to adjust the accounts as of year-end May 31, 2015, assuming that the state was unable to convert the BANs to long-term bonds by the time it issued its financial statements.
4. Comment on how the BANs would be reported on the government-wide statements as of May 31, 2015, assuming first that they were converted and second that they were not converted.

  • CreatedAugust 13, 2014
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