Question
Jefferson county has had several events which occurred subsequent to the date of the county's statement of net position. As of today, the auditing firm
Jefferson county has had several events which occurred subsequent to the date of the county's statement of net position. As of today, the auditing firm has not completed its annual audit of the county's financial statements.
The first event that occurred is that a tornado destroyed the County's Jail 30 days after the date of the statement of net position. The initial book value of the jail was $100,000,000. It has an estimated useful life of 40 years based on straight line depreciation. There is no residual value. This is the 10th year of the jail's operations. The jail was a total loss and it was uninsured.
The second event was that a major store in the county went bankrupt. As of the date of the county's statement of net position, the store owed the county $1,000,000 in sales tax which hadn't been paid as of the bankruptcy date. The county filed a claim on the unpaid taxes with the U.S. bankruptcy court, but they will only receive $0.01 per $1 on its claims following the forthcoming Chapter 7 liquidation. The liquidation will occur next year. As of the date of the statement of net position, the county had applied its standard 5% allowance against this amount.
How should the county treat these transactions? Present these transactions with the proper journal entries in the county's financial statements.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started