Question

[Para. 4-a-13] Delinquent taxes receivable in the amount of $17,150 were written off as uncollectible. Interest and penalties already recorded as receivable on these taxes, amounting to $3,087, were also written off. Additional interest on these taxes that had legally accrued was not recorded since it was deemed uncollectible in its entirety. Required: Record this transaction in the General Fund and governmental activities journals.

Answer 1

GENERAL FUND :

Tax Revenue A/c* Dr. $ 17,150

To Tax Receivable A/c $ 17,150

(Being tax receivable is now written off.)

[* Note : Instead of debiting "Tax Revenue A/c (under Income head), we can debit to "Written off A/c (under expense head). ]

Interest and Penalties A/c* Dr. $ 3,087

To Interest and Penalties Receivable A/c $ 3,087

(Being Interest and Penalties receivable is now written off.)

However, no entry required for additional interest as it is not recorded at all.

GOVERNMENTAL ACTIVITIES JOURNAL :

Same entries are to be passed as all above transactions are related to government activities.