Ronald A Cash Method Taxpayer Case Assignment
Ronald is a cash method taxpayer who made the following expenditures this year. Which expenditure is completely
deductible in this period as a business expense?
- A) $4,000 for rent on his office that covers the next 24 months.
- B) $3,000 for a new watch for the mayor to keep “good relations” with city hall.
- C) $2,500 for professional hockey tickets distributed to a customer to generate “goodwill” for his business.
- D) $55 to collect an account receivable from a customer who has failed to pay for services rendered.
- E) None of the choices are completely deductible.
The following transactions occurred for a county government. All transactions are recognized in the county’s general fund.
On January 1, 2020, a county government sends out property tax bills in the amount of $100,000,000.
Of the property tax bills sent to property owners, $15,000,000 is estimated to be uncollectible.
During the year, $88,000,000 is collected.
Of the $12,000,000 of uncollected taxes at December 31, 2020, $3,000,000 is expected to be collected within the next 60 days, and $1,800,000 is expected to be collected after 60 days.
The remaining taxes receivable are estimated to be uncollectible.
In 2021, $10,000,000 is collected related to 2020 tax bills.
In 2021, the remaining uncollected 2020 taxes are written off.
Using the attached T-account template, prepare the necessary entries to recognize the above events.
Assets = Liabilities+ Fund Balance Current Assets Current liabilities Budget Assigned Unassigned No spendable Restricted Committed