jgerm
Oct 15, 2011, 05:42 PM
You are the new junior accountant for Acme Printing Company. Acme?s fiscal year ends on December 31. You are responsible for preparing monthly financial statements. Acme Printing Company estimated its property tax bill for 2011 to be $12,000
During February 2011, Acme received the actual property tax bill for 2011 in the amount of $15,300, to be paid in installments. The installments are to be paid as follows:
Feb 28
$4,300
May 1
$4,000
Jul 1
$4,000
Sep 1
$3,000
Assume that the January 31, 2011 adjusting entries and financial statements have already been prepared and that the following journal entry was recorded:
DATE DESCRIPTION DR CR
Jan 31 Property Tax Expense 1,000
Property Tax Payable
1,000
The record 1 month of property tax payable($12,000/12=$1,000) based on estimate for the year
Assume that the above entry cannot be reversed or adjusted.
Required:
A) What is the amount that will be allocated as property tax expense for each month starting from February? (Hint: The expense for January has already been allocated but Property Tax Expense for the year is now known to be $15,300 rather than $12,000. The January expense amount cannot be adjusted as stated in the question.)
Monthly Property Tax Expense: $
B) Record the journal entries for the monthly adjusting entries to record property tax expense as well as the installment payments listed above for the period February to May. Note that the descriptions and account names for the journal entries have been provided to you. Enter the debit and credit amounts.
DATE DESCRIPTION DR CR
Feb 28 Property Tax Payable
Property Tax Expense
Prepaid Property Tax
Cash
To record payment of Jan. Accrual and payment of Feb. Expense (the difference is a prepayment)
Mar 31 Property Tax Expense
Prepaid Property Tax
To recognize property tax expense accrued
Apr 30 Property Tax Expense
Prepaid Property Tax
Property Tax Payable
To recognize property tax accrued
May 1 Property Tax Payable
Prepaid Property Tax
Cash
To recognize Installment payment
May 31 Property Tax Expense
Prepaid Property Tax
To recognize prepaid tax accrued
C) Record the journal entries for the monthly adjusting entries to record property tax expense as well as the installment payments listed above for the period June to December. Note that the account names and descriptions for the journal entries have not been provided to you this time. Select the appropriate accounts and enter the debit and credit amounts.
DATE DESCRIPTION DR CR
Jun 30
Jul 1
Jul 31
Aug 31
Sep 1
Sep 30
Oct 31
Nov 30
Dec 31
During February 2011, Acme received the actual property tax bill for 2011 in the amount of $15,300, to be paid in installments. The installments are to be paid as follows:
Feb 28
$4,300
May 1
$4,000
Jul 1
$4,000
Sep 1
$3,000
Assume that the January 31, 2011 adjusting entries and financial statements have already been prepared and that the following journal entry was recorded:
DATE DESCRIPTION DR CR
Jan 31 Property Tax Expense 1,000
Property Tax Payable
1,000
The record 1 month of property tax payable($12,000/12=$1,000) based on estimate for the year
Assume that the above entry cannot be reversed or adjusted.
Required:
A) What is the amount that will be allocated as property tax expense for each month starting from February? (Hint: The expense for January has already been allocated but Property Tax Expense for the year is now known to be $15,300 rather than $12,000. The January expense amount cannot be adjusted as stated in the question.)
Monthly Property Tax Expense: $
B) Record the journal entries for the monthly adjusting entries to record property tax expense as well as the installment payments listed above for the period February to May. Note that the descriptions and account names for the journal entries have been provided to you. Enter the debit and credit amounts.
DATE DESCRIPTION DR CR
Feb 28 Property Tax Payable
Property Tax Expense
Prepaid Property Tax
Cash
To record payment of Jan. Accrual and payment of Feb. Expense (the difference is a prepayment)
Mar 31 Property Tax Expense
Prepaid Property Tax
To recognize property tax expense accrued
Apr 30 Property Tax Expense
Prepaid Property Tax
Property Tax Payable
To recognize property tax accrued
May 1 Property Tax Payable
Prepaid Property Tax
Cash
To recognize Installment payment
May 31 Property Tax Expense
Prepaid Property Tax
To recognize prepaid tax accrued
C) Record the journal entries for the monthly adjusting entries to record property tax expense as well as the installment payments listed above for the period June to December. Note that the account names and descriptions for the journal entries have not been provided to you this time. Select the appropriate accounts and enter the debit and credit amounts.
DATE DESCRIPTION DR CR
Jun 30
Jul 1
Jul 31
Aug 31
Sep 1
Sep 30
Oct 31
Nov 30
Dec 31