In Janurary 2012, large merchants remitted sales taxes of $400 million owing to sales of Deember 2011. In February 2012, they remitted $280 million of sales taxes owing to sales of January 2012. In January small merchants remitted sales of $150 million owing to sales of the fourth quarter.

1. Prepare an appropriate journal entry to indicate the impact of the transactions on the state's fund financial statement for the year ending December 31, 2011.

2. Suppose instead, that 10 perecent of the taxe recieved by the state were collected on behalf of a city within the state. It is the policy of the state to remit the taxes to the city 30 days after it recieves them. Prepare an appropriate journal entry to indicate the impact of the transactions on the city's fund financial statements for the year ending December.31, 2011.