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For fiscal 2019, Victor Town levied a property tax of $350,000 that was expected to be...

For fiscal 2019, Victor Town levied a property tax of $350,000 that was expected to be 95% collectible. By fiscal year end, cash collection is $318,000 and the town declares the uncollected amount as delinquent. Of the delinquent taxes, $8,700 is estimated to be collected within 60 days of year end and the rest is uncollectible. In fiscal 2020, Victor Town collects $9,200 of the delinquent taxes and writes off the remaining delinquent taxes.

a. Prepare the journal entries to record all the property tax transactions in fiscal 2019.

b. Determine the amount of tax revenue reported for fiscal 2019.

c. Prepare the journal entries to record the collection and write-off of delinquent taxes.

Solutions

Expert Solution

Solution (a) Journal entries to record the property tax transactions in fiscal 2019
Date Accounts Debit Credit
Property taxes receivable 350000
    Property tax revenue – current year 332500
    Allowance for uncollectibles 17500
(to record the property tax)
Cash 318000
Deferred inflow of resources 8700
Allowance for uncollectibles 5800
    Property taxes receivable 332500
(to record the amount collected, delinquent and uncollected)
Solution (b) Amount of tax revenue reported for fiscal 2019
    =350000*95%
   =332500
Solution (c) Journal entries to record the collection and write off of dlinqunent taxed.
Date Accounts Debit Credit
2020 Cash 9200
      Deferred inflow of resources 8700
      Allowance for uncollectibles 500
( to record the collection and reversal of delinquent taxes and written off taxes)

ekkarill92 answered 2 years ago
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