Voters of Valley School District, a public school district, approved construction of a new high school at a cost not to exceed $20 million. The District will finance the construction by issuing $20 million of 6% term bonds payable in 20 years. Because the site had already been prepared, the School district began construction immediately but the bonds would not be issued for nearly a year. Shortly before the fiscal year-end, the School District borrowed $5 million from a local bank due in one year with interest at 6.2%. The note will be repaid from bond proceeds. The School District secured a financing agreement with the bank to convert the debt to a 10-year debt if the School District is unable to sell the bonds by the due date. At year-end, how should the $5 million note be displayed in the governmental fund financial statements?
a) Capital Projects Fund-Notes Payable $5 million; Nothing in the Schedule of Changes in Long-Term Obligations.