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发帖数: 66 | 1 On July 1, Year 1, Ran County issued realty tax assessments for its fiscal
year ended June 30, Year 2. On
September 1, Year 1, Day Co. purchased a warehouse in Ran County. The
purchase price was reduced by a
credit for accrued realty taxes. Day did not record the entire year's real
estate tax obligation, but instead
records tax expenses at the end of each month by adjusting prepaid real
estate taxes or real estate taxes
payable, as appropriate. On November 1, Year 1, Day paid the first of two
equal installments of $12,000 for
realty taxes. What amount of this payment should Day record as a debit to
real estate taxes payable?
a. $4,000
b. $8,000
c. $10,000
d. $12,000
Explanation
Choice "b" is correct. The total real estate tax assessment is $24,000 (2
payments times $12,000 each). The
monthly accrual equals $2,000. At the purchase date, September 1, $4,000
real estate taxes payable would
be accrued (2 months since July 1) since the buyer is assuming the real
estate tax liability. As of November
1, an additional $4,000 is accrued (2 months since September 1). When the
payment is made, real estate
taxes payable will be debited for $8,000 (4 months of accrual) and real
estate tax expense (or prepaid real
estate taxes) will be debited for $4,000. | g*******a
发帖数: 443 | |
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