1.  On January 2, 2020, the city’s tax administrator mailed annual tax bills to all property owners in the total amount of $15,467,668 (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. You need only record the grand total amount shown in the schedule above in the general journal, as illustrated in Chapter 8 of Reck, Lowensohn, and Neely.

2. [Para. 8-b-2] Delinquent taxes and related interest and penalties were collected during the year for the taxing authorities shown below:

Delinquent Interest and

Governments/Funds: Taxes Penalties Total

City of Smithville General Fund $ 387,201 $ 34,270 $ 421,471

Smithville CSD 722,650 57,810 780,460

Smith County 459,980 41,400 501,380

Smith County FPD 162,560 13,050 175,610

Total collected $1,732,391 $146,530 $1,878,921

Required: Record the collections of delinquent taxes and interest and penalties by recognizing specific liabilities to each fund or government. The 1 percent collection fee should be deducted from the amounts due to other governments; the total amount deducted from other governments should be added to the amount due to the City of Smithville General Fund. (Note: Round all amounts to the nearest whole dollar. Rounding will result in $1 too much, to rectify make the adjustment to the correct total amount to City of Smithville General Fund amount.) Make these entries only in the Tax Custodial Fund general journal. The Tax Custodial Fund records the total amount of delinquent taxes and related interest and penalties in the Taxes Receivable for Other Funds and Governments—Delinquent account. (Note: 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.)

3. [Para. 8-b-3] All cash collected in paragraph 8-b-2 was transferred to the other funds and governments in the amounts calculated, adjusted for collection fees deducted or added (see Para. 8-b-2).

4. [Para. 8-b-4] Current taxes were collected during the year for the funds and governments shown below:

Current Taxes

Funds/Governments: Collected

City of Smithville General Fund $ 1,488,206

Smithville CSD 8,412,730

Smith County 2,069,800

Smith County FPD 1,747,540

Total collected $13,718,276

Required: Record the collections of current taxes and recognize specific liabilities to each fund or government, after deducting the 1 percent collection fee from other governments and adding the total collection fee to the amount due the City of Smithville General Fund. Make these entries only in the Tax Custodial Fund general journal.

5. [Para. 8-b-5] All cash collected in paragraph 8-b-4 was transferred to the other funds and 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.)

6. [Para. 8-b-6] Make a year-end aggregate journal entry to reflect the additions and deductions made to net position for the reporting period.

Required: Using debits, record deductions for the amount of the administrative fee, and all funds transferred to other governments and funds in paragraphs 8-b-2 and 8-b-4. Additions should be credited for all property tax collections made for other governments. Recall that amounts related to the City of Smithville General Fund are not included in the journal entry because the city does not hold a net position in the fiduciary fund since it is administering the fund.

7. [Para. 8-b-7] Make the year-end journal entry to reclassify all uncollected current taxes as delinquent. Add to the receivable amount interest and penalties of 6 percent on the reclassified amount (round amount to nearest whole dollar). 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 and Governments. You need only record the aggregate amounts reclassified in the general journal; the tax administrator will update the detailed tax ledger records for these reclassifications.

3. Post the journal entries for all the preceding transactions. Prepare closing entries to close the additions and deductions accounts.

Export a post-closing trial balance for 2020 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 and related interest and penalties receivable from the amounts recorded as Taxes Receivable for Other Funds and Governments—Delinquent. The same amount should be deducted from the liability account Due to Other Funds and Governments. The city’s General Fund portion of these account balances must be deducted as only the amounts applicable to other governments can be reported in a fiduciary fund statement. Taxes receivable and interest and penalties 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.

4. Use the exported pre-closing 2020 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).

[Note: Retain the post-closing trial balance as of December 31, 2020, the statement of fiduciary net position, and the statement of changes in fiduciary net position in your cumulative folder, unless your instructor requests electronic submission of your documents, in which case you will need to save a .pdf version of you trial balances.]

Before closing the City of Smithville it is recommended that you save a backup copy of your work to another location by clicking on [File] and [Save As] for Windows and Mac. Click on “Export my Project” if you are using the Chromebook version.