Question

The City of Duncanville collects its annual property taxes late in its fiscal year. Consequently, each year it must finance part of its operating budget using tax anticipation notes. The notes are repaid upon collection of property taxes. On April 1, 2017, the city estimated that it will require $2,500,000 to finance governmental activities for the remainder of the 2017 fiscal year. On that date, it had $770,000 of cash on hand and $830,000 of current liabilities. Collections for the remainder of FY 2017 from revenues other than current property taxes and from delinquent property taxes, including interest and penalties, were estimated at $1,100,000.

Required
	Calculate the estimated amount of tax anticipation financing that will be required for the remainder of FY 2017.

Answer 1

Estimated Expenditure Requirements:
Budgeted expenditures, remainder of FY 2017	2,500,000
Add: Current liabilities payable	830,000	3,330,000
Estimated Resources Available:
Cash on hand, April 1, 2017	770,000
Add: Collections of budgeted FY 2017 revenues and delinquent property taxes, including interest and penalties	1,100,000
		1,870,000
Estimated Amount of Required Tax Anticipation Note Financing		1,460,000