Assuming that the City maintains the books and record in a manner that facilitates the preparation of the fund financial statements, prepare all necessary 2003 journal entries to record the following events related to the revenues of a city. The City has a 12/31 fiscal year-end. The city has adopted the 60-days rule for all revenue recognition for which it is appropriate.
a) On January 3, the City Council levied property taxes of $1 million to support general government operations, due in two
equal installments with due dates of June 20 and December 20. The property taxes were levied to finance the 2003 budget
which had been adopted on November 3, 2002. Historically 2% of property taxes are uncollectible.
b) The City collected the following amounts related to property taxes
Delinquent 2002 taxes collected in January, 2003 $11,000
Delinquent 2002 taxes collected in March, 2003 $12,500
2003 taxes collected in June, 2003 $540,000
2003 taxes collected in December, 2003 $400,000
Delinquent 2003 taxes collected in January, 2004 $10,000
Delinquent 2003 taxes collected in March, 2004 $15,000
c) Delinquent 2003 property taxes were reclassified as delinquent.
d) $2,000 of 2001 taxes was written off.
a) Property Tax Receivable $1,000,000
Allowance for Uncollectible Taxes $20,000
Property Tax Revenue $980,000
b) Cash $23,500
Delinquent Property Tax Receivable $23,500
Deferred Property Tax Revenue $12,500
This posting gives the solution to the problem posted by the student.