Question

On July 1, 2020, the beginning of its fiscal year, Ridgedale County recorded gross property tax levies of $3,200,000. The county estimated that 2 percent of the taxes levied would be uncollectible. As of April 30, 2021, the due date for all property taxes, the county had collected $2,950,000 in taxes. During the current fiscal year, the county collected $48,000 in delinquent taxes and $3,800 in interest and penalties on the delinquent taxes. The county imposed penalties and interest in the amount of $13,500 but only expects to collect $12,300 of that amount. At the end of the fiscal year (June 30, 2021), uncollected taxes, interest, and penalties are reclassified. They are not expected to be collected within the first 60 days for the following fiscal year.

Required

Record entries for the above transactions as stated in the individual statements below, and post corresponding information into the Revenues ledger as appropriate.

1. Prepare journal entries to record the tax levy on July 1, 2020, in the General Fund. (Ignore all entries in the governmental activities journal.)
2. Prepare a summary journal entry to record the collection of current taxes as of April 30.
3. Prepare a summary journal entry to record the collection of delinquent taxes, interest, and penalties. (You may assume that these amounts had been designated Deferred Inflows of Resources.)
4. Prepare the journal entry necessary to reclassify the uncollected tax amounts as delinquent. Assume these taxes are not expected to be collected within 60 days of year-end.
5. Prepare the journal entry necessary to record interest and penalties if they are not expected to be collected soon after year-end.

Req A to E Subsidiary Ledger Req A to E Journal Entries Show subsidiary detail for the Revenues ledger. RIDGEDALE COUNTY Revenues Ledger Account/ Description Est. Revenues Dr(Cr) Revenues Cr(Dr) Balance Dr(Cr) Taxes Property Tax 3,136,000 (3,136,000) Interest and Penalties Delinquent Taxes Property Tax 48,000 (48,000) 3,800 Interest and Penalties (51,800) Deferred Inflows of Resources Property Tax Interest and Penalties Req A to E Journal Entries Req A to E Subsidiary Ledger >

Answer 1

Answer

(a) General Fund :

The general fund is a primary fund, which is used by government agency non - profit entity or local or state government. This is similar to the general ledger account of the firm.

The general fund records all liabilities  and assets of the government but if the funds are assigned for any special purpose then it is not recorded it. This fund is mainly used to pay all the operating and administrative expenses of government and it helps in sastaining day to day records .

Journal Entry

General Fund	General Ledger		Subsidary ledger
	Debit	Credit	Debit	Credit
Current taxes receivable	$3200000
Allowance for uncollectable current taxes { 3200000*2%}		$64000
Revenues		$3136000
(Being the tax level recorded)
Revenue ledger
Property taxes				$ 3136000

To record the journal entry for tax level debit the current taxes taxes receivables (debit what comes in) Then credit the allowance for uncollectable and current taxes revenues. In the revenue ledger the property tax is recorded in the credit side of the subsidary ledger account

(b) Journal Entry

Date	Account title and explanation	General ledger		Subsidary ledger
		Debit ($)	Credit ($)	Debit ($)	Credit ($)
	General Fund
	Cash	$3136000
	Current tax receivables		$3136000

To record the journal entry for collection of taxes, debit the cash then credit the current taxes receivables.

(c) Journal Entry

Date	Account title and explanations	General ledger		subsidary ledger
		Debit	Credit	Debit	Credit
	General Fund
	Cash	$51800
	Delinquent taxes receivable		$48000
	Receivable on taxes		$3800
	Being collection of taxes interest and penaities

(d). Journal Entry

DATE	Account title and explanation	General Ledger		Subsidary Ledger
		Debit	Credit	Debit	Credit
	General Fund
	Delinquent tax receivable [3200000-2950000]	$250000
	Allowance for uncollectable current taxes	$64000
	Current tax receivable		$250000
	Allowance for uncollectable delinquent taxes		$6400

(e). Journal Entry

Date	Account title and explanation	General ledger		Subsidary Ledger
		Debit	Credit	Debit	Credit
	General Fund
	Interest and penalties receivable on taxes	$13500
	Allowance for uncollectable interest and penalties		$1200
	Revenue		$12300