Question

Chapter 8 Recording Transactions Affecting a Fiduciary Fund—a Tax Agency Fund

The City of Smithville administers a tax agency fund that bills and collects property taxes levied by the governing bodies of the Smithville Consolidated School District (CSD), Smith County, and the Smith County Fire Protection District (FPD), in addition to those levied by the City of Smithville for its General Fund. (Note: Beginning in FY 2018, the tax agency fund will also account for property tax billing and collection for the City of Smithville’s debt service fund. That fund will not levy property taxes for FY 2017.) As permitted by state law, the City of Smithville charges a collection fee of one percent of all taxes collected for the other governments.

CITY OF SMITHVILLE

Tax Agency Fund

Post-closing Trial Balance

As of December 31, 2016

Account Title                                                                       Debits   Credits

Taxes Receivable for Other Funds and                        $1,977,075

   Governments—Delinquent (including

   related interest and penalties)                                                     

Due to Other Funds and Governments                                                         $1,977,075

   Totals                                                                         $1,977,075                                                                                      $1,977,075

Required

Open a general journal as of December 31, 2016, for the Tax Agency Fund by entering the two accounts and amounts shown in the above post-closing trial balance. Enter 2016 from the drop-down [Year] menu. Each of the account titles will be found in the drop down menu [Account (# - Description)] in the [Journal] view of the program. Be sure to enter 8-a as your paragraph number in the [Transaction Description] box. Verify the accuracy of your journal entry and post it to the general ledger by clicking [Post Entries]. Unless your instructor specifies electronic submission, print a post-closing trial balance as of December 31, 2016 and retain it in your cumulative file until directed by your instructor to submit it.

[Note: Entries in this fund are not recorded at the government-wide level. Fiduciary activity information is reported only in the fiduciary fund statements and not at the government-wide level.]

The following schedule shows the tax rates that have been established by the various taxing authorities for fiscal year 2017.

     

Tax Rates Applicable to Governments

Served by the Tax Agency Fund

Fiscal Year 2017

(All amounts rounded to next higher dollar)

                                                            Tax Rate                                    

                                                           (Per $100               Assessed Tax

Governments/Funds             of Assessed Valuation)    Valuation                                                               Levy

City of Smithville:

      General Fund                                   $0.55                $314,727,270      $1,731,000

        Total city rate and levy                $0.55                                            $1,731,000

Smithville CSD:

      General Fund                                   $2.40                $370,931,790      $8,902,363

      Debt service fund                             0.12                                            445,119

      Total CSD rate and levy                $2.52                                            $9,347,482                                               

Smith County:

      General Fund                                   $0.30                $370,931,790      $1,112,796                                                County Road and Bridge Fund                                                       0.32                                            1,186,982

      Total county rate and levy             $0.62                                            $2,299,778

Smith County FPD:

      General Fund                                   $0.95                $155,336,546      $1,475,698

      Fire Station Construction Fund       0.30                                            466,010

         Total county FPD rate and levy    $1.25                                            $1,941,708

Grand Total tax rates and levies^*           $4.94                                            $15,319,968

^* Note: Each property owner will receive a tax bill equal to the tax rates of all taxing authorities that have jurisdiction over his/her property times the assessed valuation of his/her property. Shown above are the aggregate taxes levied by each government, which are also the total amounts billed by the Tax Agency Fund to all taxpayers in each jurisdiction.   

Record the following transactions that occurred during 2017 in the general journal of the Tax Agency Fund.

Before closing the City of Smithville, click on [File], and [Save/Save As] to save your work. If you close the file by clicking on the [X] box you will be asked if you want to save your changes before closing.

[Para. 8-b-1] On January 2, 2017, the city’s tax administrator mailed annual tax bills to all property owners in the total amount of $15,319,968 (see preceding table). The tax administrator maintains a detailed tax ledger to track amounts billed to and collected from each taxpayer and total amounts applicable to each fund and government. You need only record the grand total amount shown in the schedule above in the general journal, as illustrated in Chapter 8 of Reck and Lowensohn.

Answer 1

Government	Tax rate/$100	Valuation	Tax Amount($)	Fees@1%	Agency Liability
City Smithville	0.55	314727270	17,31,000	17310	17,48,310
Smithville CSD	2.52	370931790	93,47,482	-93475	92,54,007
Smith county	0.62	370931790	22,99,778	-22998	22,76,780
Smith county FPD	1.25	155336546	19,41,708	-19417	19,22,291
Total	4.94		1,53,19,968	-1,18,580	1,52,01,388

	Smithville Tax Agency fund General Journal
S.No	Account description	Debit($)	Credit($)
1	Taxes Receivables for Other Funds and Governments	1977075
	Due to Other Funds and Governments		1977075
2	Cash	1,52,01,388
	Taxes Receivables for Other Funds and Governments		1,52,01,388
3	Due to Other Funds & Governments	1,52,01,388
	Due to Smithville city General fund		17,48,310
	Due to Smithville CSD		92,54,007
	Due to Smith County		22,76,780
	Due to Smith County FPD		19,22,291
4	Due to Smithville city General fund	17,48,310
	Due to Smithville CSD	92,54,007
	Due to Smith County	22,76,780
	Due to Smith County FPD	19,22,291
	To Cash		1,52,01,388
	Smithville General fund General Journal
1	Cash A/c	17,48,310
	Tax Receivable Current A/c		16,12,420
	Revenues - Collections Fee		1,35,890