MCQ-00790 On May 1, Year 1, Marno County issued property tax assessments for the fiscal year ended June 30, Year 2. The first of two equal installments was due on November 1, Year 1. On September 1, Year 1, Dyur Co. purchased a 4-year old factory in Marno subject to an allowance for accrued taxes. Dyur did not record the entire year's property tax obligation, but instead records tax expenses at the end of each month by adjusting prepaid property taxes or property taxes payable, as appropriate. The recording of the November 1, Year 1, payment by Dyur should have been allocated between an increase in prepaid property taxes and a decrease in property taxes payable in which of the following percentages? Percentage allocated to Increase in prepaid Decrease in property property taxes taxes payable A. 50% 50% B. 0% 100% C. 33 1/3% 66 2/3% D. 66 2/3% 33 1/3% Explanation Choice "C" is correct. 33 1/3% increase in prepaid. Property Taxes 662/3% Decrease in Property Taxes Payable Decrease in Cash July 1 Sept 1 Stat Buy Bldg Tax Year (Debit) 2 Months (Debit) 4 Months (Credit) 6 Months Nov 1 Dec 1 Paymnt Decrease in Property Taxes Payable - Debt JUL AUG SEP 4 Months 4/6 = 66 2/3% OCT Increase in Prepaid Property Taxes-Debt NOV 2 Months DEC 2/6 = 33 1/3%