The City of Troy collects its annual property taxes late in its fiscal year. Consequently, each year it must finance part of its operating budget using tax anticipation notes. The notes are repaid upon collection of property taxes. On April 1, the city estimated that it will require $2,700,000 to finance governmental activities for the remainder of the fiscal year. On that date, it had $790,000 of cash on hand and $850,000 of current liabilities. Collections for the remainder of the year from revenues other than current property taxes and from delinquent property taxes, including interest and penalties, were estimated at $1,200,000. Required a Calculate the estimated amount of tax anticipation financing that will be required for the remainder of the current fiscal year. b. Assume that on April 2, the City of Troy borrowed the amount calculated in part a by signing tax anticipation notes bearing 7 percent per annum to a local bank. Record the issuance of the tax anticipation notes in the general journals of the General Fund and governmental activities at the government-wide level. c. By October 1, the city had collected a sufficient amount of current property taxes to repay the tax anticipation notes with interest. Prepare the general journals of the General Fund and governmental activities at the government-wide level.
The City of Troy collects its annual property taxes late in its fiscal year. Consequently, each year it must finance part of its operating budget using tax anticipation notes. The notes are repaid upon collection of property taxes. On April 1, the city estimated that it will require $2,700,000 to finance governmental activities for the remainder of the fiscal year. On that date, it had $790,000 of cash on hand and $850,000 of current liabilities. Collections for the remainder of the year from revenues other than current property taxes and from delinquent property taxes, including interest and penalties, were estimated at $1,200,000. Required a Calculate the estimated amount of tax anticipation financing that will be required for the remainder of the current fiscal year. b. Assume that on April 2, the City of Troy borrowed the amount calculated in part a by signing tax anticipation notes bearing 7 percent per annum to a local bank. Record the issuance of the tax anticipation notes in the general journals of the General Fund and governmental activities at the government-wide level. c. By October 1, the city had collected a sufficient amount of current property taxes to repay the tax anticipation notes with interest. Prepare the general journals of the General Fund and governmental activities at the government-wide level.
Chapter6: Business Expenses
Section: Chapter Questions
Problem 53P
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Transcribed Image Text:The City of Troy collects its annual property taxes late in its fiscal year. Consequently, each year it must finance part of its operating
budget using tax anticipation notes. The notes are repaid upon collection of property taxes. On April 1, the city estimated that it will
require $2,700,000 to finance governmental activities for the remainder of the fiscal year. On that date, it had $790,000 of cash on
hand and $850,000 of current liabilities. Collections for the remainder of the year from revenues other than current property taxes and
from delinquent property taxes, including interest and penalties, were estimated at $1,200,000.
Required
a. Calculate the estimated amount of tax anticipation financing that will be required for the remainder of the current fiscal year.
b. Assume that on April 2, the City of Troy borrowed the amount calculated in part a by signing tax anticipation notes bearing 7 percent
per annum to a local bank. Record the issuance of the tax anticipation notes in the general journals of the General Fund and
governmental activities at the government-wide level.
c. By October 1, the city had collected a sufficient amount of current property taxes to repay the tax anticipation notes with interest.
Prepare the general journals of the General Fund and governmental activities at the government-wide level.
Complete this question by entering your answers in the tabs below.
Required A Required B
Required C
Calculate the estimated amount of tax anticipation financing that will be required for the remainder of the current fiscal year.
CITY OF TROY
Calculation of Estimated Required
Estimated Expenditure Requirements:
Budgeted expenditures, remainder of year
Current liabilities payable
Estimated Resources Available:
Tax Anticipation Financing
Cash on hand, beginning of year
Collections of budgeted revenues and delinquent property taxes, including interest and penalties
Estimated Amount of Required Tax
Anticipation Note Financing
S
0
$
0
Assume that on April 2, the City of Troy borrowed the amount calculated in part a by signing tax anticipation notes bearing 7 percent per
annum to a local bank. Record the issuance of the tax anticipation notes in the general journals of the General Fund and governmental
activities at the government-wide level. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first
account field.)
Transaction
Fund/Governmental
Activties
1. Record the issuance of the tax anticipation notes.
1
General Fund
Governmental Activities
General Journal
Show less
Debit
Credit
By October 1, the city had collected a sufficient amount of current property taxes to repay the tax anticipation notes with interest. Prepare
the general journals of the General Fund and governmental activities at the government-wide level. (If no entry is required for a
transaction/event, select "No Journal Entry Required" in the first account field.)
Transaction
Fund/Governmental
Activties
General Journal
Debit
Credit
1. Record the repayment of the tax anticipation notes and interest.
1
General Fund
Governmental Activities
< Required B
Required C >
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