Glennelle's Boutique Incorporated operates in a city in which real estate tax bills for one year are issued in May of the subsequent year. Thus, tax bills for 2022 are issued in May 2023 and are payable in July 2023. Required: 1. How the amount of tax expense for calendar 2022 and the amount of taxes payable (if any) at December 31, 2022, can be determined? a. The amount is estimated based on prior year taxes. b. The amount is estimated based on future year taxes. 2. Use the horizontal model to show the effect of accruing 2022 taxes of $6,900 at December 31, 2022. Indicate the financial statement effect.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Glennelle's Boutique Incorporated operates in a city in which real estate tax bills for one year are issued in May of the subsequent year. Thus, tax bills for 2022 are issued in May 2023 and are payable in July 2023.

Required:

1. How the amount of tax expense for calendar 2022 and the amount of taxes payable (if any) at December 31, 2022, can be determined?

a. The amount is estimated based on prior year taxes.

b. The amount is estimated based on future year taxes.

2Use the horizontal model to show the effect of accruing 2022 taxes of $6,900 at December 31, 2022. Indicate the financial statement effect.

Assets
Cash
Real estate tax expense
Real estate taxes payable
Balance Sheet
Liabilities
+
+
Stockholders' Equity
Ne
Transcribed Image Text:Assets Cash Real estate tax expense Real estate taxes payable Balance Sheet Liabilities + + Stockholders' Equity Ne
rs' Equity
Net Income
Income Statement
Revenues
Cash
Real estate tax expense
Real estate taxes payable
Expenses
Transcribed Image Text:rs' Equity Net Income Income Statement Revenues Cash Real estate tax expense Real estate taxes payable Expenses
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