Record the monthly property tax accrual

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Assignment

Students will provide the journal entry to record the monthly property tax accrual, to record the payment of the taxes, and to record the monthly adjusting entry at the end of the month.

Sammy Company is located in a county that assesses property for tax purposes on July 1 for the period July 1-June 30. The tax rate is not determined until October 15, and the tax bills are mailed October 22 with payment due by December 31. For the prior fiscal year, the Sammy Company paid $22,500. The tax bill for the current fiscal year (July 1, 2014-June 30, 2015) is received on October 28, and property taxes have increased to$ 22,838. The company pays this amount on October 31.

Complete the following:

• Record the monthly property tax accrual that is recorded in July 2014.
• Record the payment of the taxes on October 31.
• Record the monthly adjusting entry on October 31.
• According to generally accepted accounting principles (GAAP), discuss how current liabilities should be classified.
• Provide an example of each, and discuss how current liabilities are valued at the balance sheet.

Reference no: EM131506624

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