Question

The general fund of the Town of Dean levied property taxes of $3,000,000 for the fiscal year beginning on January 1, 20X8. It was estimated that 1% of the levy would be uncollectible. During the period January 1, 20X8, through December 31, 20X8, $2,960,000 of the property tax levy was collected. At December 31, 20X8, Dean estimated that $10,000 of property taxes levied in 20X8 would be collected during the first 60 days of 20X9. What amount of property tax revenue should be reported by the general fund for the year ended December 31, 20X8?

Answer 1

Answer: $2,970,000

Explanation:

According to US tax laws, property taxes can be recognised for 60 days into the next financial period because it is assumed that within this period, the taxes can still cover expenses related to the period that it is from.

Therefore, if Property taxes are paid within the first 60 days in 20X9 then the Town of Dean should recognise those taxes paid.

Those taxes amount to $10,000 so therefore, the amount to be reported in the fund is,

= 2,960,000 + 10,000

= $2,970,000

$2,970,000 is amount of property tax revenue that should be reported by the general fund for the year ended December 31, 20X8.