Property Taxes Payable-Annual Adjustments
Lexington Builders owns property in Kaneland County. Lexington's 2013 property taxes amounted to $50,000. Kaneland County will send out the 2014 property tax bills to property owners during April 2015. Taxes must be paid by June 1, 2015. Assume that Lexington prepares adjusting entries only once a year, on December 31, and that property taxes for 2014 are expected to increase by 5% over those for 2013.
Required
1. Prepare the adjusting entry required to record the property taxes payable on December 31, 2014.
2. Prepare the journal entry to record the payment of the 2014 property taxes on June 1, 2015.