Chapter 8 Recording Transactions Affecting a Fiduciary Fund-a Tax Custodial Fund The City of Smithville currently administers a tax custodial fund that bills and collects property taxes levied by the governing bodies of the Smithville Consolidated School District (CSD). Smith County, and the Smith County Fire Protection District (FPD), in addition to those levied by the City of Smithville for its General Fund. As permitted by state law, the City of Smithville charges a collection fee of 1 percent of all taxes collected for the other governments. Note that for simplicity, interest and penalties that are imposed on delinquent taxes are included in the calculations but not separately recorded in these transactions. CITY OF SMITHVILLE Tax Custodial Fund Post-closing Trial Balance As of December 31, 2022 Account Title Taxes Receivable for Other Funds and Debits $1.977,075 Credits Governments Delinquent Due to Other Funds $ 443.488 Net Position Restricted for Other Governments Totals $1.977.075 1.533.587 $1.977.075 Required a. Open a general journal as of December 31. 2022. for the Tax Custodial Fund by entering the three accounts and amounts shown in the above post-closing trial balance. Enter 2022 from the drop-down [Year] menu. Each of the account titles will be found in the drop-down menu [Account] in the [Journal] view of the program. Be sure to enter 8-a as your paragraph number in the [Add description] box. Verify the accuracy of your journal entry and post it to the general ledger by clicking [Post entries]. Unless your instructor specifies electronic submission. print a post-closing trial balance as of December 31, 2022 and retain it in your cumulative file until directed by your instructor to submit it. [Note: Entries in this fund are not recorded at the government-wide level. Fiduciary activity information is reported only in the fiduciary fund statements and not at the government-wide level.] b. The following schedule shows the tax rates that have been established by the various taxing authorities for fiscal year 2023. SAMSUNG Tax Rates Applicable to Governments Served by the Tax Custodial Fund Fiscal Year 2023 (All amounts rounded to next higher dollar) Tax Rate (Per $100 Assessed Tax Governments/Funds of Assessed Valuation) Valuation Levy City of Smithville: General Fund $0.55 $341.581.818 $1.878,700 Total city rate and levy $0.55 $ 1.878,700 Smithville CSD: General Fund $2.38 $408.024.970 $ 9,710,994 Debt service fund 0.12 Total CSD rate and levy $2.52 489,630 $10.200.624 Smith County: General Fund $0.64 $408.024.970 Total county rate and levy $0.64 Grand Total tax rates and levies $3.69 $ 2.611.360 $ 2,611.360 $14.690.684 Note: Each property owner will receive a tax bill equal to the tax rates of all taxing authorities that have jurisdiction over his/her property times the assessed valuation of his/her property. Shown above are the aggregate taxes levied by each government. which are also the total amounts billed by the Tax Custodial Fund to all taxpayers in cach jurisdiction. Record the following transactions that occurred during 2023 in the general journal of the Tax Custodial Fund. 1. [Para. 8-b-1] On January 2, 2023, the city's tax administrator mailed annual tax bills to all property owners in the total amount of $14,690,684 (see preceding table). The tax administrator maintains a detailed tax ledger to track amounts billed to and collected from each taxpayer and total amounts applicable to each fund and government. Required: Record in the general journal the total taxes receivable, the amount due to the city and the total amount added to the net position for property tax collections for the other governments as shown in the schedule above. See the transactions illustrated in Chapter 8 of Reck. Lowensohn, and Neely. 2. [Para. 8-b-2] Delinquent taxes (including any interest and penalties assigned to the delinquent taxes) were collected during the year for the taxing authorities shown below SAMSUNG 3. 2 [Para. 8-b-2] Delinquent taxes (including any interest and penalties assigned to the delinquent taxes) were collected during the year for the taxing authorities shown below: Governments/Funds: City of Smithville General Fund Smithville CSD Delinquent Taxes $ 421.471 780.460 30 2022 by McGraw Hill. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Smith County 4. Total collected 676.990 $1.878.921 Required: Record the cash collection of delinquent taxes. The Tax Custodial Fund records the total amount of delinquent taxes in the Taxes Receivable for Other Funds and Governments-Delinquent account. [Para. 8-b-3] The 1 percent collection fee was assessed on the Smithville CSD and the Smith County collections made in transaction 8-b-2. Required: Calculate the 1 percent collection fee on the amounts collected for the Smithville CSD and Smith County; the total collection fee for these two governments should be recorded as Deductions Administrative Fee and as a Due to Other Funds for the amount due to the City of Smithville. Round all amounts to the nearest whole dollar (.50 is rounded up). Make these entries only in the Tax Custodial Fund general journal. All cash receipts and collection fees were recorded in earlier chapters in the journals for the General Fund and governmental activities at the government-wide level. The collection fees, though not separately identified, were included in Revenues-Charges for Services in the General Fund and in Program Revenues-General Government- Charges for Services in governmental activities. [Para. 8-b-4] All cash collected in paragraph 8-b-2 was transferred to the city and the other two governments in the amounts calculated, adjusted for the 1 percent collection fee deducted from cash distributions to the Smithville CSD SAMSUNG 4. 5. Para. 8-D-4] All cash collected in paragraph 8-b-2 was transferred to the city and the other two governments in the amounts calculated, adjusted for the 1 percent collection fee deducted from cash distributions to the Smithville CSD and the Smith County. The collection fee is added to the distribution to the City of Smithville (see Para. 8-b-3). Required: Record the payment of cash to the city. Smithville CSD, and Smith County. [Para. 8-b-5] Current taxes were collected during the year for the funds and governments shown below: Funds/Governments: City of Smithville General Fund Smithville CSD Current Taxes Collected $ 1.596.895 8.670.530 Smith County Total collected 2.219.656 $12.487.081 Required: Record the collection of current taxes, record this entry only in the Tax Custodial Fund general journal. 6. [Para. 8-b-6] The 1 percent collection fee was assessed on the Smithville CSD and the Smith County collections. 2022 by McGraw Hill. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 7. Required: Calculate the 1 percent collection fee on the amounts due to other governments; the total collection fee from other governments should be recorded as Deductions-Administrative Fee and a Due to Other Funds for the amount due to the City of Smithville. (Note: Round all amounts to the nearest whole dollar.) Make these entries only in the Tax Custodial Fund general journal. [Para. 8-b-7] All cash collected in paragraph 8-b-6 was transferred to the city and the other two governments, adjusted for collection fees deducted or added. SAMSUNG 11 11 31 que to the City or Smithville. (Note: Round all amounts to the nearest whole dollar.) Make these entries only in the Tax Custodial Fund general journal. 7. [Para. 8-b-7] All cash collected in paragraph 8-b-6 was transferred to the city and the other two governments, adjusted for collection fees deducted or added. (Note: For simplicity. Chapter 4 of Smithville did not address this collection of fees by the custodial fund.) 8. [Para. 8-b-8] Make the year-end journal entry to reclassify all uncollected current taxes as delinquent. Add to the receivable amount interest and penalties of $66,108 on the reclassified amount. The interest and penalties portion of the total amount should be debited to Taxes Receivable for Other Funds and Governments Delinquent and credited to Due to Other Funds for the City of Smithville portion of $8,454 and Additions Interest and Penalties Collections for Other Governments for the remaining $57,654. 9. [Para. 8-b-9] Make the year-end closing journal entry to close deductions and additions to Net Position-Restricted Other Governments. Be sure that the check mark for [Closing Entry] is on for each account being closed and that "Closing Entries" appears in the [Add description] box. Post the closing entries to the general ledger by clicking on [Post entries]. c. Post the journal entries for all the preceding transactions. Select [Export] from the drop down [File] menu to create an Excel post-closing trial balance for 2023 to prepare a statement of fiduciary net position for the Tax Custodial Fund (for an example of a custodial fund statement, see the last column of Illustration 8-6 of the textbook). You should deduct the city's General Fund portion of delinquent taxes receivable from the amounts recorded as Taxes Receivable for Other Funds and Governments-Delinquent. The city's General Fund portion of the account balance must be deducted as only the amounts applicable to other governments can be reported in a fiduciary fund statement. Similarly, the liability Due to Other Funds would not be included on the fiduciary net position. Taxes receivable that are applicable to the city itself were reported in the General Fund balance sheet that you prepared in Chapter 4 of this project. d. Select [Export] from the drop down [File] menu to create an Excel pre-closing 2023 trial balance to prepare a statement of changes in fiduciary net position for the Tax Custodial Fund (for an example of a custodial fund statement, see the last column of Illustration 8-7 of the textbook). SAMSUNG