Q2. A city receives sales taxes of $825,000 from the state during the calendar year 2018. In January 2019, the state advises the city that it will remit, by February 28, 2019, an additional $345,000 for taxes collected during the last quarter of 2018. Further, based on past experience, the city expects to receive in April an additional $93,000 applicable to 2018. The city has a policy of considering sales taxes applicable to a particular year as available if received by February 28 of the following year; hence, $93,000 of the $345,000 receivable is not available.

(1.5 Marks)

Required:

a. Prepare necessary journal entry to record collection of sales tax for the city

b. Prepare necessary journal entry to record year-end accrual for sales taxes receivable.

Answer: