A-Z Construction Company was organized on May 1 of the current year. On May 2, A-Z Construction prepaid $5,040 to the city for taxes (license fees) for the next 12 months and debited the prepaid taxes account. A-Z Construction is also required to pay in January an annual tax (on property) for the previous calendar year. The estimated amount of the property tax for the current year (May 1 to December 31) is $20,860.

a. Journalize the two adjusting entries required to bring the accounts affected by the two taxes up to date as of December 31, the end of the current year. License fees _______

Property tax _______

b. What is the amount of tax expense for the current year? $_______

Answer rating: 100% (QA)

Adjusting Entries for AZ Construction Company a License Fees Since AZ Construction prepaid 5040 for ... View the full answer