Property Taxes Payable—Annual Adjustments Lexington Builders owns property in Kaneland County. Lexington’s 2009 property taxes amounted to $50,000. Kaneland County will send out the 2010 property tax bills to property owners during April 2011. Taxes must be paid by June 1, 2011. Assume that Lexington prepares adjustments only once a year, on December 31, and that property taxes for 2010 are expected to increase by 5% over those for 2009.

Required 1. Identify and analyze the adjustment to record the property taxes payable on December 31, 2010.

2. Identify and analyze the transaction to record the payment of the 2010 property taxes on June 1, 2011.

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