The General Fund of the City of Lexington approved a tax levy for the calendar year 2015 in the amount of $2,000,000. Of that amount,$30,000 is expected to be uncollectible. During 2015,$1,750,000 was collected. During 2016,$100,000 was collected during the first 30 days,$50,000 was collected during days 31-60,and $70,000 was collected during the days 61-90. During the post-audit,you discovered that the City showed $2,000,000 in revenues. How much revenue should the City recognize in 2015 from this tax levy?

Question

Quizplus · Accepted Answer

The City should recognize $1,900,000 in revenue for 2015. This is calculated by taking the total tax levy of $2,000,000 and subtracting the expected uncollectible amount of $30,000, resulting in $1,970,000. However, only the amounts collected within the first 60 days of the following year ($1,750,000 in 2015 and $100,000 in the first 30 days of 2016) are considered available and should be recognized, totaling $1,850,000. Adding the $50,000 collected in days 31-60 of 2016 gives $1,900,000.

The General Fund of the City of Lexington Approved a Tax