Accounting for property taxes
At the start of calendar year 2012, Central City's records showed the following accounts relative to prior year property taxes:
Property taxes- delinquent................................ 52,000,
Allowance for uncollectible taxes- delinquent.......... 8,000,
Deferred property tax revenues................................. 15,000
Prepare journal entries to record the following transactions:
1. To balance its 2012 budget, which requires $ 1,500,000 in property taxes, Central City levies property taxes in the amount of $ 1,515,000, providing an allowance of $ 15,000 for uncollectible accounts.
2. During the year 2012, it collects property taxes as follows:
From prior year delinquent taxes............................. 44,000,
From 2012 tax levy ............................................ 1,490,000
3. Central City recognizes the $ 15,000 deferred property tax revenues as revenues for 2012.
4. It initiates foreclosure proceedings against the delinquent taxpayer who owed the city $ 8,000. When it does this, it charges the taxpayer a penalty of $ 1,000.
5. An auctioneer sells the foreclosed property for $ 40,000, deducts a fee of $ 3,000, and remits $ 37,000 to the city. The city deposits the check and prepares a voucher for the net amount due to the taxpayer.
6. The city reverses the Allowance for uncollectible taxes- delinquent ($ 8,000) because the lien has been satisfied and all prior year delinquent taxes have been collected.
7. Central City rebates $ 12,000 to taxpayers who had paid their 2012 taxes, but who successfully appealed their tax assessments.
8. At year- end, the city, (a) Declares all unpaid 2012 taxes as delinquent; ,(b) Concludes that there is no need for an allowance for uncollectible accounts; and ,(c) Estimates that $ 15,000 of the delinquent taxes will be collected in the first 60 days of calendar year 2013.