Question: (Accounting for property taxes) Orinoco City's General Fund had the following transactions regarding property taxes during calendar year 2012. Prepare journal entries to record the transactions.
1. Orinoco levies property taxes in the amount of $2,000,000. Experience shows that 3 percent of the amount levied will not be collected for various reasons, including appeals of tax assessments.
2. Based on tax assessment appeals, Orinoco reduces taxes for several taxpayers by a total of $60,000.
3. Orinoco collects cash of $1,800,000 on the property tax levy.
4. Orinoco declares as delinquent all taxes unpaid as of December 31.
5. For financial reporting purposes, the Orinoco comptroller determines that all unpaid taxes will be collected in 2013, but that only $115,000 of the amount due will be collected in the first 60 days of 2013.