Question

Zarr Town levied property taxes of $500,000, of which 1% is expected to be uncollectible. During the year, Zarr Town collected $450,000. What amount of property tax revenue should Zarr Town report in its government-wide statement of activities for the current year

Answer 1

$495,000

Step-by-step explanation:

Since Zarr Town expects to collect 99% of the property taxes levied during the year, should report $500,000 x 99% = $495,000 as property tax revenue. Even if the town only collects $450,000 during the year, the last property tax installments generally are due by the end of March. So the remaining $45,000 will probably be collected next year.