Question

The City of Troy 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, the city estimated that it will require $2,500,000 to finance governmental activities for the remainder of the fiscal year. On that date, it had $770,000 of cash on hand and $830,000 of current liabilities. Collections for the remainder of the year from revenues other than current property taxes and from delinquent property taxes, including interest and penalties were estimated at $1,100,000. Required a. Calculate the estimated amount of tax anticipation financing that will be required for the remainder of the current fiscal year. b. Assume that on April 2, the City of Troy borrowed the amount calculated in part a by signing tax anticipation notes bearing 6 percent per annum to a local bank. Record the issuance of the tax anticipation notes in the general journals of the General Fund and governmental activities at the government-wide level. c. By October 1, the city had collected a sufficient amount of current property taxes to repay the tax anticipation notes with interest. Prepare the general journals of the General Fund and governmental activities at the government-wide level. Complete this question by entering your answers in the tabs below. Required A Required B Required Calculate the estimated amount of tax anticipation financing that will be required for the remainder of the current fiscal year. $ 0 CITY OF TROY Calculation of Estimated Required Tax Anticipation Financing Estimated Expenditure Requirements: Budgeted expenditures, remainder of year Current liabilities payable Estimated Resources Available: Cash on hand, beginning of year Collections of budgeted revenues and delinquent property taxes, including interest and penalties Estimated Amount of Required Tax Anticipation Note Financing $ 0

Answer 1

solutiong amount amount particulars 2500000 830000 3320 000 Estimated expen dature requirement en Budger expendature Carrent liabilities payable Less! - Estimated resource available :- cash in hand 770 UDD 1100000 (1870000) collection of budget Revenue oeud delinquent property taxes Estimated amount of required Pada take Anticipation note financing 1460000 The estimated amount of tare anticipation note financing for the fiscal year is $1460000. (6) Journal entry's particulars Date Debit credit 1460000 Cash --Alc To Tax anticipation notes payable € Being the issuance of tea and anticipation notes) $146000

c) Journal entry : particulars 'Debit credit General fundi Tax anticipation notes payable Ale / $1460000 Expendature Ale (lubovoox6%. x) $ 43800 To cash 11503800 Governmental activitiee? Tax anticipation notes payable Ale 1 & General government expenses Ale $ 43800 1460000 To cash , 1503800 (Being the payment of taxe and Interest)