Question

I'm having a hard time making the journal entry for this portion of my project:

[Para. 6-d-7] During the second half of 2021, property taxes were collected in the amount of $290,000.

At year-end, the uncollected amount of current property taxes receivable and related estimated uncollectible amount were reclassified as delinquent. Interest and penalties of $3,600 were also levied, of which $180 was estimated as uncollectible and $684 was classified as a deferred inflow of resources, the remainder was recognized as revenue.

Required: Prepare the journal entries to record the receipt of current property taxes, to reclassify amounts as indicated; to accrue interest and penalties, and related revenues and deferred inflow of resources.

Thank you! <3

Answer 1

Journal entry for Taxes receivable is as follows

Taxes Receivable A/c....Dr $300000

To Allowances for uncollectible taxes Cr $10000

To Revenues Cr $290000

[as the taxes receivable is not given in the question , i have assumed amounts]

When taxes are realised

Cash A/c.......Dr $300000

To taxes receivable-current Cr $290000

To taxes receivable(delinquent) Cr $10000

[deinquent taxes are assumed to be at $10000]

Interest and penalty are levied on delinquent taxes. In this case $3600 is levied

Interest and penalties receivable Dr $3600

To allowances for uncollectible taxes Cr $180

To Deferred inflow of resources Cr $684

To Revenue Cr $2736

When Interest and penalties are realised

Cash A/c..........Dr $2736

To interest and penalties receivable Cr $2736