Question

On July 1, 2017, the beginning of its fiscal year, Ridgedale County recorded gross property tax levies of $4,000,000. The county estimated that 5 percent of the taxes levied would be uncollectible. As of April 30, 2018, the due date for all property taxes, the county had collected $3,710,000 in taxes. The county imposed penalties and interest in the amount of $14,300, but only expects to collect $12,700 of that amount. At the end of the fiscal year (June 30, 2018) the county had collected $52,000 in delinquent taxes and $4,600 in interest and penalties on the delinquent taxes. Required a-1. Prepare journal entries to record the tax levy on July 1, 2017 in the General Fund. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Answer:

Journal Entry

01 July Debit Taxes Receivable $4,000,000 Credit Allowance for uncollectible tax $200,000 Credit Revenue $3,800,000

30 April Debit Bank $3,710,000 Credit Taxes Receivables $3,710,000

 Debit Interest and penalties on Unpaid Taxes $14,300 Credit Allowance for interests and penalties $1,600 Credit Revenue $12,700

30 June Debit Bank $56,600 Credit Tax Receivable $52,000 Credit Interest and taxes on unpaid taxes $4,600

Explanation:

Allowance for uncollectible tax = $4,000,000*5% =$200,000

Allowance for interests and penalties  = 14,300 - 12,700 = 1,600