A state requires large merchants (i.e., those with sales over a specied dollar amount) to report and
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In January 2015, large merchants remitted sales taxes of $ 400 million owing to sales of December 2014. In February 2015, they remitted $280 million of sales taxes owing to sales of January 2015. In January small merchants remitted sales taxes of $150 million owing to sales of the fourth quarter of 2014.
1. Prepare an appropriate journal entry to indicate the impact of the transactions on the state’s fund financial statements for the year ending December 31, 2014.
2. Suppose, instead, that 10 percent of the taxes received by the state were collected on behalf of a city within the state. It is the policy of the state to remit the taxes to the city 30 days after it receives them. Prepare an appropriate journal entry to indicate the impact of the transactions on the city’s fund financial statements for the year ending December 31, 2014.
3. Suppose instead that it was the policy of the state to remit the taxes to the city 90 days after it receives them. How would your response to Part (2) differ? Explain. Would your response be the same with respect to the city’s government-wide statements?
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Related Book For
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118155974
6th edition
Authors: Michael H. Granof, Saleha B. Khumawala
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