On July 1, 2020, the beginning of its fiscal year, Ridgedale County recorded gross property tax levies of $4,200,000. The county estimated that 2 percent of the taxes levied would be uncollectible. As of April 30, 2021, the due date for all property taxes, the county had collected $3,900,000 in taxes. During the current fiscal year, the county collected $53,000 in delinquent taxes and $4,800 in interest and penalties on the delinquent taxes. The county imposed penalties and interest in the amount of $14,500 but only expects to collect $12,800 of that amount. At the end of the fiscal year (June 30, 2021), uncollected taxes, interest, and penalties are reclassified. They are not expected to be collected within the first 60 days for the following fiscal year.
Required
- a. Prepare journal entries to record the tax levy on July 1, 2020, in the General Fund. (Ignore all entries in the governmental activities journal.)
- b. Prepare a summary
journal entry to record the collection of current taxes as of April 30. - c. Prepare a summary journal entry to record the collection of delinquent taxes, interest, and penalties. (You may assume that these amounts had been designated Deferred Inflows of Resources.)
- d. Prepare the journal entry necessary to reclassify the uncollected tax amounts as delinquent. Assume these taxes are not expected to be collected within 60 days of year-end.
- e. Prepare the journal entry necessary to record interest and penalties if they are not expected to be collected soon after year-end.
- f. Suppose that a portion of the delinquent taxes included in part d is collected within 60 days of year-end. Would this information affect the accounting treatment of the taxes?
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Chapter 4 Solutions
Accounting For Governmental & Nonprofit Entities
- In 2020 Metro City received $250,000 of tax underpayments and paid $80,000 in refunds based on taxpayers filing their 2019 returns in 2020. In addition, in 2020 the city received $700,000 in withholding and estimated tax payments for 2020. The city conducted audits in 2019 and assessed and billed tax deficiencies of $30,000 of which it collected $25,000 in 2019 and $5,000 in 2020. The city conducted audits in 2020 and assessed and billed tax deficiencies of $40,000 of which it collected $36,000 in 2020. Required; Calculate the amount of Income Tax Revenue that Metro City should report on its 2020 Fund Financial Statements.arrow_forwardSinigang na Baboy Company, a domestic corporation, started operations in the latter part of the first quarter of 2020. The company opted to report its financial statements for the nine months ended December 31, 2020. The pretax financial income for the period was P1,200,000. In preparing the income tax return for the period, the tax accountant determined the following differences between 2020 financial income and taxable income. a. Because of non-compliance with some local government requirements, the city treasurer assessed fines and penalties totaling P22,500. b. The company made a donation to Hospicio de San Jose amounting to P25,000. Tax laws consider a donation of this kind as non-deductible in full amount. c. Cash dividends received from equity investments in a domestic corporation, P5,200. d. Rent was paid in advance for one year amounting to P240,000. The financial statement of Sinigang na Baboy Company reported prepaid rent of P60,000. e. The company uses straight-line…arrow_forwardThe fiscal year of Duchess County ends on December 31. Property taxes are due on March 31 of the year in which they are levied. Prepare journal entries (excluding budgetary and closing entries) to record the following property tax‐related transactions in which the county engaged in 20X1 and 20X2. On January 15, 20X1, the county council levied property taxes of $170 million for the year ending December 31, 20X1. Officials estimated that 1 percent would be uncollectible. During 20X1, it collected $120 million. In January and February 20X2, prior to preparing its 20X1 financial statements, it collected an additional $45 million in 20X1 taxes. It reclassified as delinquent the $5 million of 20X1 taxes not yet collected. In January 20X2, the county levied property taxes of $190 million, of which officials estimated 1.1 percent would be uncollectible. During the remainder of 20X2, the county collected $2.5 million more in taxes relating to 20X1, $160 million relating to 20X2, and $1.9…arrow_forward
- The following information concerns tax revenues for the city of Fairfield. The balances concerning property taxes on January 1, 2018, were as follows:Delinquent property taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . $105,000Allowance for uncollectible delinquent taxes . . . . . . . . . . . . . . . . . . (30,000)Tax liens receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000Allowance for uncollectible tax liens . . . . . . . . . . . . . . . . . . . . . . . . . (23,000)Prepare entries in the general fund for the following 2018 events:Jan. Since current property taxes would not be collected for several months, $275,000 was borrowed using tax anticipation notes.Feb. Tax liens of $10,000 were collected; in addition, $2,000 of interest was collected that had not been accrued. The balance of tax liens was settled by receiving $13,000 for the property subject to the tax liens.Apr. Collections on delinquent property taxes were $100,000,…arrow_forwardTired Company, a domestic corporation, started operations in the latter part of the first quarter of 2020. The company opted to report its financial statements for the nine months ended December 31, 2020. The pretax financial income for the period was P1,200,000. In preparing the income tax return for the period, the tax accountant determined the following differences between 2020 financial income and taxable income. a. Because of non-compliance with some local government requirements, the city treasurer assessed fines and penalties totaling P22,500. b. The company made a donation to Hospicio de San Jose amounting to P25,000. Tax laws consider a donation of this kind as non-deductible in full amount. c. Cash dividends received from equity investments in a domestic corporation, P5,200. d. Rent was paid in advance for one year amounting to P240,000. The financial statement of Tired Company reported prepaid rent of P60,000. e. The company uses straight-line depreciation for all its…arrow_forwardUnlike Illinois, the Village of Maple Park is located in a state in which property taxes are levied and collected in the same fiscal year. The information below pertains to the Village’s general fund for the year ended December 31, 2022: $9,819,000 of property tax revenue was included in the estimated revenues budget for 2022; Property taxes were levied in February, 2022, and $171,000 of the levy was expected to be uncollectible; On the two property tax collection dates, a total of $9,600,000 was collected; At December 31, 2022, the Village expected property tax collections during the first 60 days of 2023 to be $38,000. Required: 1. On the December 31, 2022, balance sheet for the Village’s general fund, what is the amount reported under assets for property taxes receivable(net)? 2. On the Village’s general fund statement of revenues, expenditures, and changes in fund balance for the year ended December 31, 2022, what is the amount reported for property…arrow_forward
- The following transactions relate to Newport City’s special revenue fund. In 2020, Newport City created a special revenue fund to help fund the 911 emergency call center. The center is to be funded through a legally restricted tax on cellular phones. No budget is recorded. During the first year of operations, revenues from the newly imposed tax totaled $530,000. Of this amount, $477,000 has been received in cash and the remainder will be received within 60 days of the end of the fiscal year. Expenditures (salaries) incurred through the operation of the 911 emergency call center totaled $469,000. Of this amount, $438,515 was paid before year-end. During the year the state government awarded Newport City a grant to reimburse the City’s costs (not to exceed $180,000) for the purpose of training new 911 operators. During the year, the City paid $171,000 (not reflected in the expenditures above) to train new operators for the 911 emergency call center and billed the state government.…arrow_forwardBenton County includes an independent school district and two individually chartered towns within the County. Benton County’s Treasurer assesses and collects property taxes on behalf of itself, the school district, and the towns. The County uses a tax collection custodial fund to record tax collections for the school district and towns. During the year ended December 31, 2020, the following transactions took place:1. The County levied taxes as follows: Benton County General Fund $ 26,600,000 School District 14,100,000 Towns 4,100,000 Total $ 44,800,000 2. The property taxes levied in part (a) were collected.3. The amounts collected were paid to the school district and towns.Required:a. Prepare journal entries for Benton County and the Benton County Independent School District—identify the funds.arrow_forwardDuring the current year, the City of Plattsburgh recorded the following transactions related to its property taxes: Levied property taxes of $6,590,000, of which 2 percent is estimated to be uncollectible. Collected current property taxes amounting to $5,973,000. Collected $52,900 in delinquent taxes and $4,800 in interest and penalties on the delinquent taxes. These amounts had been recorded as Deferred Inflows of Resources in the prior year. Imposed penalties and interest in the amount of $7,400 but only expects to collect $6,200 of that amount. Reclassified uncollected taxes and interest and penalties as delinquent. These amounts are not expected to be collected within the first 60 days of the following fiscal year. Required Prepare journal entries to record the property tax transactions in the General Fund. Prepare journal entries to record the property tax transactions in the governmental activities journal. Determine the amount of property tax revenue recognized during the…arrow_forward
- The following information relates to Hudson City for its fiscal year ended December 31, 2020.• During the year, retailers in the city collected $1,700,000 in sales taxes owed to the city. As of December 31, retailers have remitted $1,100,000. $200,000 is expected in January 2021, and the remaining $400,000 is expected in April 2021. • On December 31, 2019, the Foundation for the Arts pledged to donate $1, up to a maximum of $1 million, for each $3 that the museum is able to collect from other private contributors. The funds are to finance construction of the city-owned art museum. During 2020, the city collected $600,000 and received the matching money from the Foundation. In January and February 2021, it collected an additional $2,400,000 and also received the matching money. • During the year, the city imposed license fees on street vendors. All vendors were required to purchase the licenses by September 30, 2020. The licenses cover the one-year period from October 1, 2020, through…arrow_forwardThe following transactions relate to Newport City’s special revenue fund. In 2020, Newport City created a special revenue fund to help fund the 911 emergency call center. The center is to be funded through a legally restricted tax on cellular phones. No budget is recorded. During the first year of operations, revenues from the newly imposed tax totaled $495,000. Of this amount, $445,500 has been received in cash and the remainder will be received within 60 days of the end of the fiscal year. Expenditures (salaries) incurred through the operation of the 911 emergency call center totaled $441,000. Of this amount, $412,335 was paid before year-end. During the year the state government awarded Newport City a grant to reimburse the City’s costs (not to exceed $159,000) for the purpose of training new 911 operators. During the year, the City paid $151,050 (not reflected in the expenditures above) to train new operators for the 911 emergency call center and billed the state government.…arrow_forwardThe County includes an independent school district and two individually chartered towns within the County. The County’s Treasurer assesses and collects property taxes on behalf of itself, the school district, and the towns. The County uses a tax collection custodial fund to record tax collections for the school district and towns. During the year ended December 31, 2020, the following transactions took place:1. The County levied taxes as follows: County General Fund $27,000,000 School District 14,500,000 Towns 4,500,000 Total $46,000,000 2.The property taxes levied (in transaction #1) were collected. 3. The amounts collected were paid to the school district and towns.Required:Prepare journal entries to record the transactions for the County’s tax collection custodial fund. (If no entry is required for a transaction/event, state “No entry.”)arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning