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A state collects sales taxes both for itself and for counties that have elected to piggy - back their taxes on the state tax. The
A state collects sales taxes both for itself and for counties that have elected to "piggyback" their taxes on the state tax. The state takes several weeks to process returns and determine how much each participating government should receive, so tax collections are temporarily invested. Resulting investment income is distributed to the state to defray processing costs.
Prepare entries to record these transactions in the Custodial Fund only.
a The state collects sales taxes totaling $ for itself and participating counties.
b The entire $ is temporarily invested.
c The state determines that $ of the tax collections belong to the state and that the remaining $ should be distributed to the counties.
d The investments are immediately liquidated and $ is received in cash. The investment earnings are due to be paid to the States general fund.
e Tax collections and the investment income are forwarded to the state and the counties.
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