I need this to be 1-2 pages of original work... Must provide information for all of the bullet points. Assignment is below:
Students will provide the journal entry to record the monthly property tax accrual, to record the payment of the taxes, and to record the monthly adjusting entry at the end of the month.
Sammy Company is located in a county that assesses property for tax purposes on July 1 for the period July 1–June 30. The tax rate is not determined until October 15, and the tax bills are mailed October 22 with payment due by December 31. For the prior fiscal year, the Sammy Company paid $22,500. The tax bill for the current fiscal year (July 1, 2014–June 30, 2015) is received on October 28, and property taxes have increased to$ 22,838. The company pays this amount on October 31.
Complete the following:
- Record the monthly property tax accrual that is recorded in July 2014.
- Record the payment of the taxes on October 31.
- Record the monthly adjusting entry on October 31.
- According to generally accepted accounting principles (GAAP), discuss how current liabilities should be classified. (details)
- Provide an example of each, and discuss how current liabilities are valued at the balance sheet. (details)
Explanation & Answer
Running head: JOURNAL ENTRY RECORDS
Journal entry records
JOURNAL ENTRY TO RECORDS
Record the monthly property tax accrual that is recorded in July 2014
Debit Tax Expense Account $22,500
Credit Tax Liability Account $22,500
When a liability is recognized, it is credited as it increases liability.
Record the payment of the taxes on October 31
Debit Tax Liability Account $22,838
Credit Tax Expense Account $22,838
Whenever a liability gets settled, it means that the liability reduces and thus...
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