The City of Jonesboro allows discounts on taxes. Specifically, taxpayers get a 1% discount on the total tax if it is paid within one month of the initial levy. What would the journal entry be to record the levy of $700,000 if the government anticipates there will be a 2% uncollectible rate and it is anticipated that the discounts will be $5,000?

\begin{array}{lllr}&&\text {Debit}&\text {Credit}\\\text { A. }&\text { Taxes Receivable } & \$ 700,000 & \\&\quad \text { Allowance for Uncollectible Taxes } & & \$ 14,000 \\&\quad \text { Allowance for Discounts } & & 5,000 \\&\quad \text { Revenues }&&681,000 \\\text { B. }&\text { Taxes Receivable } & \$ 700,000 & \$ 700,000 \\&\quad \text { Revenues } & & \\\text { C.}&\text { Taxes Receivable } &\$6995,000 \\&\quad \text { Expenditures } & 5,000 & \\&\quad \text { Allowance for Uncollectible Taxes } &&\$14,000\\&\quad \text { Revenues } & & 686,000 \\\text { D. }&\text { Taxes Receivable } & \$ 700,000 \\&\quad \text { Allowance for Uncollectible Taxes }& & \$ 14,000 \\&\text { Revenues } & & 686,000\end{array}

Under the Modified Accrual Basis, Revenues Are Considered Available to Finance

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge