Tax Levy…Retrocative?

  • Creator
    Topic
  • #2554794
    animalwithin
    Participant

    The answer to this question included the year 1 taxes collected in October and December. My question is why? I know Modified Accrual counts taxes up to 60 days in advance but why is this accounting for year 2 taxes using amounts collected in year 1?

    Pine City’s year end is June 30. Pine levies property taxes in January of each year for the calendar year. One-half of the levy is due in May and one-half is due in October. Property tax revenue is budgeted for the period in which payment is due. The following information pertains to Pine’s property taxes for the period from July 1, year 1, to June 30, year 2:

    Year 1 Levy: $2,000,000

    Collected in Year 1:

    May $950,000
    July 50,000
    October 920,000
    December 80,000

    The $40,000 balance due for the May, year 2, installments was expected to be collected in August, year 2. What amount should Pine recognize for property tax revenue for the year ended June 30, year 2?

  • You must be logged in to reply to this topic.