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