P. 4-2 For each of the following indicate the amount of revenuethat Beanville should recognize in its 2017 (1) government-widestatements and (2) governmental fund statements. Provide a briefjustification or explanation for your responses. The state in whichBeanville is located collects sales taxes for its cities and otherlocal governments. The state permits small merchants to remit salestaxes quarterly. The state sales tax rate is 6 percent. In December2016, city merchants collected $50 million in sales taxes that theyremitted to the state on January 15, 2017. The state, in turn,transferred the taxes to the city on February 15, 2017. In December2016, the federal government awarded Beanville a reimbursementgrant of $500,000 to train law-enforcement agents. The city hadapplied for the grant in January of that year. The city may incurallowable costs any time after receiving notification of the award.In 2017, the city incurred $400,000 in allowable costs and wasreimbursed for $350,000. It was reimbursed for the $50,000 balancein February 2018. In January and February 2018, it incurred theremaining $100,000 in allowable costs and was reimbursed for themin April 2018. In December 2016 the city levied property taxes of$1 billion for the calendar year 2017. The taxes are due June 30,2017. The city collected these taxes as follows: December 2016 $ 56million January 1, 2016, to December 31, 2016 $ 858 million January1, 2017, through March 31, 2017 ($18 million per month) $ 54million Total $ 968 million It estimates the balance of $32 millionwould be uncollectible. In addition, in the period from January 1through February 28, 2017, the city collected $16 million in taxesthat were delinquent as of December 31, 2016. In the period March 1through June 30 2017, the city collected $8 million of taxes thatwere also delinquent as of December 31, 2016. In December 2017Beanville sold a city-owned warehouse to a private developer. Salesprice was $4.2 million. The warehouse had cost $4 million when itwas acquired 10 years earlier. It had an estimated useful life of40 years (with no salvage value). In December 2017, Beanville'scity-owned radio station held its annual fund drive. A localbusiness offered to match all pledges made on December 2, 2017, upto $50,000, assuming that the amount pledged was actuallycollected. Based on past experience the city estimates that 90percent of the pledges will actually be collected. By year-end2017, the city had collected $25,000 of the pledges, and in Januaryand February it collected an additional $15,000. It received$25,000 of the matching funds on February 15, 2018. Respond withrespect only to the $50,000 in matching funds.
P. 4-2 For each of the following indicate the amount of revenuethat Beanville should recognize in its 2017 (1) government-widestatements and (2) governmental fund statements. Provide a briefjustification or explanation for your responses. The state in whichBeanville is located collects sales taxes for its cities and otherlocal governments. The state permits small merchants to remit salestaxes quarterly. The state sales tax rate is 6 percent. In December2016, city merchants collected $50 million in sales taxes that theyremitted to the state on January 15, 2017. The state, in turn,transferred the taxes to the city on February 15, 2017. In December2016, the federal government awarded Beanville a reimbursementgrant of $500,000 to train law-enforcement agents. The city hadapplied for the grant in January of that year. The city may incurallowable costs any time after receiving notification of the award.In 2017, the city incurred $400,000 in allowable costs and wasreimbursed for $350,000. It was reimbursed for the $50,000 balancein February 2018. In January and February 2018, it incurred theremaining $100,000 in allowable costs and was reimbursed for themin April 2018. In December 2016 the city levied property taxes of$1 billion for the calendar year 2017. The taxes are due June 30,2017. The city collected these taxes as follows: December 2016 $ 56million January 1, 2016, to December 31, 2016 $ 858 million January1, 2017, through March 31, 2017 ($18 million per month) $ 54million Total $ 968 million It estimates the balance of $32 millionwould be uncollectible. In addition, in the period from January 1through February 28, 2017, the city collected $16 million in taxesthat were delinquent as of December 31, 2016. In the period March 1through June 30 2017, the city collected $8 million of taxes thatwere also delinquent as of December 31, 2016. In December 2017Beanville sold a city-owned warehouse to a private developer. Salesprice was $4.2 million. The warehouse had cost $4 million when itwas acquired 10 years earlier. It had an estimated useful life of40 years (with no salvage value). In December 2017, Beanville'scity-owned radio station held its annual fund drive. A localbusiness offered to match all pledges made on December 2, 2017, upto $50,000, assuming that the amount pledged was actuallycollected. Based on past experience the city estimates that 90percent of the pledges will actually be collected. By year-end2017, the city had collected $25,000 of the pledges, and in Januaryand February it collected an additional $15,000. It received$25,000 of the matching funds on February 15, 2018. Respond withrespect only to the $50,000 in matching funds.
