A city levies a 2 percent sales tax.Sales taxes must be remitted by the merchants to the city by the twentieth day of the month following the month in which the sale occurred.Cash received by the city related to sales taxes is as follows: $\begin{array}{ll}
\text { Amount received } 1 / 20 / 14 \text {, applicable to December } 2013 \text { sales } & \$ 100 \
\text { Amount received } 2 / 20 / 14 \text {, applicable to January } 2014 \text { sales } & \$ 30 \
\text { Amount received during } 2014 \text { related to February-November } 2014 \text { sales } & \$ 400 \
\text { Amount received } 1 / 20 / 15 \text { for December } 2014 \text { sales } & \$ 110 \
\text { Amount received } 2 / 20 / 152 \text { for January } 2014 & \$ 40
\end{array}$ Assuming the city uses the same period to define "available" as the maximum period allowable for property taxes,what amount should it recognize in the government-wide financial statements as sales tax revenue for the fiscal year ended 12/31/14?

Question

Quizplus · Accepted Answer

To determine the revenue to be recognized for the fiscal year ended 12/31/14, we need to consider the sales for the period of January 2014 (which is the period covered by the property tax).

The sales for the period of January 2014 would include the sales made in January 2014 that are due by 2/20/14 (which is before the end of the property tax period), as well as the sales made in December 2013 that are due by 1/20/14 (which is within the property tax period).

Therefore, the sales to be recognized as revenue for the fiscal year ended 12/31/14 would be:

Sales for January 2014: $40
Sales for December 2013: $100
Total: $140

Note that the sales made in February-November 2014, as well as the sales made in December 2014 (due by 1/20/15), would be recognized as revenue in the fiscal year ended 12/31/15.

Thus, the correct answer is option C.

A City Levies a 2 Percent Sales Tax Assuming the City Uses the Same Period to Define "Available