Question

A city that has property taxes of $720,000 (of which 10 percent are estimated to be uncollectible) which are levied in October 2016 to finance the activities of the fiscal year 2017. During 2017, cash collections related to property taxes levied in October 2016 were $600,000. In 2018 the following amounts related to the property taxes levied in October 2016 were collected: January $30,000; March, $6,000. For the fiscal year ended 12/31/17, what amount should be recognized as property tax revenues related to the 2016 levy on the governmental fund financial statements? $720,000 $648,000 $630,000 $600,000

Answer 1

Answer:

$648,000

Explanation:

For the fiscal year ended 12/31/17, the amount that should be recognized as property tax revenues related to the 2016 levy on the governmental fund financial statements is $648,000.

We were told in the scenario that the city ''has property taxes of $720,000 (of which 10 percent are estimated to be uncollectible) which are levied in October 2016 to finance the activities of the fiscal year 2017''

Therefore the amount to be recognized will be:

         Property Taxes.......................720,000

Less: 10% Uncollectible Amounts...72,000

Amount to be recognized...............648,000