In October 2015, the Village of Mason levied $80 million of property taxes for its 2016 fiscal year (which is the same as the calendar year). The taxes are payable 50 percent by December 31, 2015, and 50 percent by June 30, 2016. The village collected $55 million of the 2016 taxes by year-end 2015 and the $25 million balance by the end of 2016. The government has a legally enforceable claim on the taxed property on the first due date—that is, December 31, 2015.
In December 2015, the state announced that the village would receive $ 3 million in state assistance. The funds were paid in January 2016 and could have been used (per terms of the state legislation) to cover any legitimate village expenditures incurred in 2016.
1. Prepare fund journal entries to summarize the property tax and grant activity for the fiscal years ending December 31, 2015 and 2016.
2. How would you justify any apparent inconsistencies as to if and when you recognized the taxes receivable as opposed to the grants receivable?

  • CreatedAugust 13, 2014
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