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    Modified accrual accounting method for property tax bills

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    Show the impact of each transaction on the fundamental equation of accounting using modified accrual accounting method for Phoenix city.
    Phoenix city issued $350,000 in property tax bills this year. Total collections for the year were the $20,000 from the previous year's ending balance in taxes receivables and $300,000 of this year's taxes. The remaining taxes are expected to be collected during the first month of the following year.

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    Property taxes are recorded as revenues in the year the tax is levied. Therefore, the entry to record the property taxes issued requires a debit to Property Taxes Receivable-Current and a credit to Revenues. The debit and credit are for the full amount of $350,000. If a known amount is expected to be uncollected, a credit to an allowance account should also be made.

    Uncollected taxes from the prior year would have been re-classified at year-end from current to delinquent. ...

    Solution Summary

    Modified accrual accounting methods for property tax bills are examined. The impact of each transactions are examined.