Question

Exercise 7-8 Other accrued liabilities-real estate taxes LO 5 [The following information applies to the questions displayed below.] Calista Co. operates in a city in which real estate tax bills for one year are issued in May of the subsequent year. Thus, tax bills for 2013 are issued in May 2014 and are payable in July 2014. References Section BreakExercise 7-8 Other accrued liabilities-real estate taxes LO 5 6. value: 2.50 points Required information Exercise 7-8 Part b - Journal entry b.2 Record the journal entry to show the effect of accruing 2013 taxes of $7,300 at December 31, 2013. b.2 Record the journal entry to show the effect of accruing 2013 taxes of $7,300 at December 31, 2013. Exercise 7-8 Part c - Journal entry c-2. Assume that the actual tax bill, received in May 2014, was for $7,690. Record the journal entry to show the effects of the appropriate adjustment to the amount previously accrued.

Answer 1

Journal Entry at December 13 2013:-

Date	Particulars	Debit Amount	Credit Amount
Dec 31, 2013	Real Estate Taxes	$7,300
	Accrued Liabilities – Real Estate Taxes		$7,300
	(Liability accrued for Real Estate Taxes for year 2013)

Actual Bill Received for 2013 real estate taxes =$7,690

Difference from Liability recorded = $7,690 - $7,300 = $390

Journal for adjustment of $390:-

Date	Particulars	Debit Amount	Credit Amount
May 2014	Real Estate Taxes	$390
	Accrued Liabilities – Real Estate Taxes		$390
	(Difference in Liability accrued previously recorded for Real Estate Taxes for year 2013 now adjusted as per actual bill received)