(Uncollectible accounts-allowance method)

The City of Chalmette levied property taxes of $\$ 150,000$ in FY 2004. Prior experience shows that 10 percent of these taxes will not be collected.

\section*{Required:}

1. What is the appropriate entry to set up the receivable for FY 2004 property taxes if the allowance method is used?

2. Taxpayer Holmes, whose tax levy is $\$ 2,000$, is unable to pay her property taxes. The city decides to write off her account. Make the entry necessary to record this event.

3. If the Holmes account is not written off until FY 2005, what effect will this have on the FY 2005 revenues? Why?