17. Agency Funds and a School District Fund Jefferson County maintains a tax age

Question

17. Agency Funds and a School District Fund

Jefferson County maintains a tax agency fund for use by the County Treasurer to record receivables, collections, and disbursements of all property tax collections to all units of government in the county. In the year 2012, the following taxes were levied:

$6,300,000 in property taxes were levied for the General Fund, of which 2% are deemed to be uncollectible.

$3,450,000 in property taxes were levied for the school district.

$3,150,000 in property taxes were levied for the city of Bemidji in the county.

               Required:

Prepare the journal entry for the Agency Fund to record the $6,600,000 levy which will be transferred to the school district and the City of Bemidji.

The agency fund then collected 92% of the levy which is $6,072,000.

The agency fund remits $3,174,000 less a $79,350 fee to the school district and $2,898,000 less a $72,450 fee for the city of Bemidji. The Jefferson County General Fund charges 2.5% of collections as a fee for maintaining the agency fund.

Prepare the journal entry for the School District General Fund to record the tax levy of $3,450,000.

Prepare the journal entry for the School District General Fund to record the cash received of of $3,094,650 and the expenditure of $79,350 from the Taxes Receivable of $3,174,000.

Explanation / Answer

1. the journal entry for the Agency Fund to record the $6,600,000 levy which will be transferred to the school district and the City of Bemidji is as follows :

Debit : Taxes Receivables Account with $ 6,600,000.

Credit : Revenue Account with $ 6,600,000.

2. the journal entry for the School District General Fund to record the tax levy of $3,450,000 is as follows :

Debit : Tax Agency Fund Account with $3,450,000.

Credit: Revenue Account with $3,450,000.

3. the journal entry for the School District General Fund to record the cash received of of $3,094,650 and the expenditure of $79,350 from the Taxes Receivable of $3,174,000 is as follows :

Debit : Cash Account with $3,094,650.

Debit : Revenue Account with $79,350.

Credit : Tax Agency Fund Account with $3,174,000.

(Being cash received and expenditure incurred on the fees of tax agency fund)

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