Reference no: EM131704116

Question: (Property tax revenue transactions and measurement in financial statements(FSs)) Honesdale levies property taxes in March of each year to help finance the General Fund expenditures for the calendar year. Property owners are required to pay the taxes in equal installments in April and October. Taxes remaining uncollected are declared delinquent at the end of the year. The facts regarding property taxes levied and collected for calendar years 2012 and 2013 are as follows: 2012: Honesdale levied property taxes of $700,000, anticipating the entire amount to be collected. It actually collected $650,000 during the year. When the village prepared its financial statements, it assumed all the delinquent taxes would be collected during 2013: $37,000 in the first 60 days and the remaining $13,000 later in 2013. 2013: Regarding the $50,000 of delinquent 2012 taxes, Honesdale collected $40,000 in the first 60 days of 2013 and $8,000 during the rest of 2013, and the village wrote off the remaining $2,000 as uncollectible. For calendar year 2013, Honesdale levied property taxes of $730,000, again expecting the entire amount to be collected. It actually collected $690,000 in the year of the levy. When it prepared its 2013 financial statements, the village assumed $37,000 of the delinquent 2013 taxes would be collected during 2014: $30,000 in the first 60 days and $7,000 later in the year. It established an allowance of $3,000 for uncollectible taxes.

Prepare journal entries as follows:

a. Record the year 2012 transactions in the General Fund, including the year-end adjustment needed to prepare the fund financial statements.

b. Make the adjustment needed to prepare the governmental activities column of the 2012 government-wide statements.

c. Record the year 2013 transactions in the General Fund, including the year-end adjustment needed to prepare the fund financial statements.

d. Make the adjustment needed to prepare the governmental activities column of the 2013 government-wide statements.

e. Also, calculate the amount of property tax revenues Honesdale should recognize in its fund financial statements and in its government-wide statements for 2012 and 2013.