Question

Owasco Township assesses property in January, sends out property tax bills in February, and expects payment of property taxes in two equal installments on June 30 and December 31. Owasco Township’s fiscal year begins on March 1, which also is the lien date for property taxes. Fisher Co. received a $8,400 property tax bill on February 17. Make the monthly entries related to property tax for one year as it relates to the accrual and payment of the $8,400 tax.

Answer 1

Assumed that Answer required to pass accounting entries only.

Period of property tax 1st March to February end.

Received Property tax bill in the month of February.

$. 8400 is a year property tax amount.

Property tax bill payment on accrual basis ( not advance payment)

Accounting Entry as follows,

February Property Tax Amount Dr $ 8400

To Provision for Property Tax payment $ 8400

( Being Expenses recognized and provision created as no payment done)

June 30 Provision for Property Tax payment Dr $ 4200

To Cash $4200

(Being First installment paid)

Dec. 30 Provision for Property Tax payment Dr $ 4200

To Cash $4200

(Being Second installment paid)