Property Tax Transactions On March 15, the town of Endicott levied property taxes of $49,000,000. Based on past experience, town management estimated that the town will not collect 3 percent of the taxes. Taxes were due September 30, but $13,860,000 was received before that date from taxpayers taking advantage of a 1 percent discount for early payment. Endicott treats discounts given as a reduction of revenues. On December 31, the town's year-end, outstanding taxes totaled $2,800,000 of which $700,000 is expected to be collected during the first 60 days of the new year. Actual expenditures for the year of $46,200,000, paid in cash, equaled appropriations. The budget entry included estimated revenues of $44,800,000. Before the budget entry, the fund balance for the general fund was $7,000,000.00. No taxes receivable existed prior to the current year. Required a. Prepare the journal entries to record the property tax transactions, including any adjusting entries at December 31. Taxes receivable Description Allowance for uncollectible taxes Tax revenues To record tax levy and establish allowance for uncollectible taxes. Cash Tax revenues Taxes receivable To record collection of taxes prior to due date. Cash Taxes receivable To record collection of taxes. To adjust allowance for uncollectible taxes. Expenditures Cash To record cash expenditures for the year. b. Calculate the general fund's fund balance at December 31. $ 0 Debit 49000000 Credit 0 1470000 0 47530000 13860000 138600 0 13998600 32201400 ° 32201400 ° 0 0 0 ° 0 ° 0
Property Tax Transactions On March 15, the town of Endicott levied property taxes of $49,000,000. Based on past experience, town management estimated that the town will not collect 3 percent of the taxes. Taxes were due September 30, but $13,860,000 was received before that date from taxpayers taking advantage of a 1 percent discount for early payment. Endicott treats discounts given as a reduction of revenues. On December 31, the town's year-end, outstanding taxes totaled $2,800,000 of which $700,000 is expected to be collected during the first 60 days of the new year. Actual expenditures for the year of $46,200,000, paid in cash, equaled appropriations. The budget entry included estimated revenues of $44,800,000. Before the budget entry, the fund balance for the general fund was $7,000,000.00. No taxes receivable existed prior to the current year. Required a. Prepare the journal entries to record the property tax transactions, including any adjusting entries at December 31. Taxes receivable Description Allowance for uncollectible taxes Tax revenues To record tax levy and establish allowance for uncollectible taxes. Cash Tax revenues Taxes receivable To record collection of taxes prior to due date. Cash Taxes receivable To record collection of taxes. To adjust allowance for uncollectible taxes. Expenditures Cash To record cash expenditures for the year. b. Calculate the general fund's fund balance at December 31. $ 0 Debit 49000000 Credit 0 1470000 0 47530000 13860000 138600 0 13998600 32201400 ° 32201400 ° 0 0 0 ° 0 ° 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Property Tax Transactions
On March 15, the town of Endicott levied property taxes of $49,000,000. Based on past experience, town management estimated that the town will not collect 3 percent of the taxes. Taxes were due September 30, but $13,860,000 was received before that date from taxpayers taking
advantage of a 1 percent discount for early payment. Endicott treats discounts given as a reduction of revenues. On December 31, the town's year-end, outstanding taxes totaled $2,800,000 of which $700,000 is expected to be collected during the first 60 days of the new year. Actual
expenditures for the year of $46,200,000, paid in cash, equaled appropriations. The budget entry included estimated revenues of $44,800,000. Before the budget entry, the fund balance for the general fund was $7,000,000.00. No taxes receivable existed prior to the current year.
Required
a. Prepare the journal entries to record the property tax transactions, including any adjusting entries at December 31.
Taxes receivable
Description
Allowance for uncollectible taxes
Tax revenues
To record tax levy and establish allowance for uncollectible taxes.
Cash
Tax revenues
Taxes receivable
To record collection of taxes prior to due date.
Cash
Taxes receivable
To record collection of taxes.
To adjust allowance for uncollectible taxes.
Expenditures
Cash
To record cash expenditures for the year.
b. Calculate the general fund's fund balance at December 31.
$ 0
Debit
49000000
Credit
0 1470000
0 47530000
13860000
138600
0 13998600
32201400
° 32201400
°
0
0
0
°
0
°
0
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