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Journal entries--property tax accounting Prepare entries to record the following

ID: 2488187 • Letter: J

Question

Journal entries--property tax accounting

Prepare entries to record the following transactions and events related to Mason County property taxes for the year beginning January 1, 2015.

a) To raise property tax revenues of $940,000, the County sends bills to property owners totaling $945,000. This will provide a $5,000 allowance for uncollectible taxes. The County makes no provision for possible tax refunds.

b) Shortly after receiving his $5,000 tax bill, Harry appeals his assessment. His tax bill is reduced by $1,000. He then pays the remaining $4,000 that is due.

c) Mason County receives $900,000 in cash from taxpayers who make timely payment on their taxes.

d) Brown's home is destroyed by a fire; he declares bankruptcy and the County writes off his $3,000 tax bill as uncollectible.

e) Smith and Wesson, who received bill totaling $8,000 are unable to pay on time. The County bills them $300 for interest. They subsequently pay the taxes plus interest.

f) At year end, the County declares all unpaid property taxes to be delinquent. Interest and penalties amounting to $1,500 is assessed against the delinquent taxpayers.

g) The County decides to increase its Allowance for Uncollectible Taxes by $3,000

Explanation / Answer

a.

Property taxes receivable – current

$ 945,000

Allowance for uncollectible property taxes – current

$ 5,000

Revenues - property taxes

$ 940,000

b.

Cash

$ 4,000

Revenues - property taxes

$ 1,000

Property taxes receivable – current

$ 5,000

c.

Cash

$ 900,000

Property taxes receivable – current

$ 900,000

d.

Allowance for uncollectible property taxes – current

$ 3,000

Property taxes receivable – current

$ 3,000

e.

Interest and penalties receivable

$ 300

Revenues - interest and penalties

$ 300

Cash

$ 8,300

Property taxes receivable – current

$ 8,000

Interest and penalties receivable

$ 300

a.

Property taxes receivable – current

$ 945,000

Allowance for uncollectible property taxes – current

$ 5,000

Revenues - property taxes

$ 940,000

b.

Cash

$ 4,000

Revenues - property taxes

$ 1,000

Property taxes receivable – current

$ 5,000

c.

Cash

$ 900,000

Property taxes receivable – current

$ 900,000

d.

Allowance for uncollectible property taxes – current

$ 3,000

Property taxes receivable – current

$ 3,000

e.

Interest and penalties receivable

$ 300

Revenues - interest and penalties

$ 300

Cash

$ 8,300

Property taxes receivable – current

$ 8,000

Interest and penalties receivable

$ 300