Prepare general journal entries to record the following transactions in Rockwall
ID: 2445673 • Letter: P
Question
Prepare general journal entries to record the following transactions in Rockwall City’s General Ledger and make adjusting entries, if needed:
Rockwall City levied property taxes of $12,000,000 for 2011. The taxes were levied on January 1, 2011. Rockwall expects $80,000 to be uncollectible. Three-fourths of the taxes receivable are expected to be collected within the 2% discount period. Another $1,000,000 of taxes receivable should be collected before year-end but after the discount period. The balance of the collectible taxes is expected to be collected at a uniform rate over the first 10 months of 2012.
Rockwall collected $9,100,000 (before discounts) of its taxes receivable prior to the end of the discount period. The balance of the taxes receivable is past due.
Rockwall wrote off taxes receivable of $30,000 as uncollectible.
Rockwall collected another $900,000 of its taxes receivable after the discount period but before year-end.
Explanation / Answer
Journal entries for year - 2011 Particulars Debit Credit Debitor Account Dr $ 12,000,000 To Property Tax income $ 12,000,000 (Being Tax was levied on Site) Bad debtor Account Dr $ 80,000 To Provision for bad debtors Account $ 80,000 (Being provision for bad debtors) Cash Account Dr $ 8,761,200 Discount allowed $ 178,800 To Debitor Account $ 8,940,000 (Being amount collected from Debitor) Cash Account Dr $ 1,000,000 To Debitor Account $ 1,000,000 (Being cash collected) Cash Account Dr $ 9,100,000 Discount allowed $ 182,000 To Debtors Account $ 9,100,000 To Provision for discount $ 182,000 (Being Debtor paid the tax before the due date and not provided discount and generated the provision) Provision for bad debtors Account Dr $ 30,000 To Debtors Account $ 30,000 (Being bad debtors Account) Cash Account Dr $ 900,000 To Debtors Account $ 900,000 (Being cash collected )