The City of Casper levied property taxes for 2012 in the amount of $8,000,000.The amount estimated to be uncollectible is 3%.By the end of the year,$7,300,000 had been collected.It was estimated that $400,000 would be collected during the next 60 days of 2011 and that $240,000 would be collected after that.The City has a policy of recognizing the full amount possible for property taxes.Which of the following statements is true?

Question

Quizplus · Accepted Answer

According to the policy of recognizing the full amount possible for property taxes, the total amount of property tax revenue to be recognized would be:

$8,000,000 x 97% (collectible amount) = $7,760,000

Of this amount, $7,300,000 had been collected, and an additional $400,000 is estimated to be collected in the next 60 days of 2011, leaving a remaining amount of:

$7,760,000 - $7,700,000 (collected and estimated to be collected) = $60,000

Therefore, the amount reported for property tax revenue in the government-wide Statement of Activities would be $7,660,000 ($7,300,000 + $400,000 + $60,000).

The amount reported for property tax revenue in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances would be $7,700,000 ($7,300,000 + $400,000) since it only includes actual and estimated cash collections for the current period.

As both statements are true, the correct choice is C.

The City of Casper Levied Property Taxes for 2012 in the Amount