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Serhud [2]
2 years ago
12

On January 1, 2020, a county government sends out property tax bills in the amount of $100,000,000. Of this amount, $15,000,000

is estimated to be uncollectible. During the year, $88,000,000 is collected. Of the $12,000,000 in uncollected taxes at December 31, 2020, $3,000,000 is expected to be collected within the next 60 days, and $1,800,000 is expected to be collected after 60 days. The rest are estimated to be uncollectible. In 2021, $10,000,000 is collected related to 2020 tax bills, and the remaining uncollected 2020 taxes are written off.
What is the balance in the allowance for uncollectible taxes on the December 31, 2020 general fund balance sheet?

Select one:

A. $ 9,000,000

B. $12,000,000

C. $10,200,000

D. $ 7,200,000
Business
1 answer:
Lesechka [4]2 years ago
4 0

Answer:

B. $12,000,000

Explanation:

Hi there!

At the beginning of 2020 we estimate the credits that will be uncollectible and constitute the allowance for uncollectible.

<u>The journal entry:</u>

                                                                      Debit             Credit                          

Bad debts expense                               $15,000,000

Allowance for uncollectible account                             $15,000,000

During the year $88,000,000 was collected and part of the forecast must be reversed since it was overestimated (remember that it was estimated to collect $85,000,000 from the $ 100,000,000)

<u>The jorunal entry:</u>

                                                                    Debit             Credit

Allowance for uncollectible account    $3,000,000

Bad debts expense                                                      $3,000,000

Allowance for uncollectible account  ledger, December 31 2020

<h3><u>Allowance for uncollectible acc</u><u>ou</u><u>nt </u></h3>

          Debit                  Credit

                                $15,000,000

      <u> $3,000,000                               </u>

                                   $12,000,000

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