The following data applies to the next three questions:
The City of Charlestown levied property taxes in the amount of $10,000,000. It is estimated that 2% will not be collected. The taxes were levied July 1, 2014 for the fiscal year ended June 30, 2015. During the year ended June 30, 2015, $8,900,000 in property taxes were collected from this levy. It is estimated that $620,000 will be collected during the next 60 days, $300,000 will be collected more than 60 days after June 30, 2015, and $180,000 will never be collected.
-When preparing the General Fund financial statements,how much property tax revenue should be recognized from this levy for the year ended June 30,2015?

Question

Quizplus · Accepted Answer

The total amount of taxes levied is $10,000,000, but it is estimated that 2% ($200,000) will not be collected. Therefore, the total amount of revenue that can be recognized is $9,800,000. Of this amount, $8,900,000 was collected during the fiscal year, $620,000 is estimated to be collected within 60 days after June 30, and $300,000 is estimated to be collected more than 60 days after June 30. Therefore, the total amount of revenue recognized for the year ended June 30, 2015 is $9,520,000 ($8,900,000 + $620,000 + $300,000). The $180,000 that will never be collected should be written off as a bad debt expense.

The Following Data Applies to the Next Three Questions