Property Taxes
Response to the following problem:
Family Practice Associates has an estimated property tax liability of $7,200 assessed as of January 1, 2010, for the year May 1, 2010, to April 30, 2011. The property tax is paid on September 1, 2010. The property tax becomes a lien against the property on May 1.
Required:
Prepare the necessary monthly journal entries to record the preceding information for the period from May 1 to September 30, 2010 (assuming actual taxes are the same as estimated). What would be the amount of the liability on December 31, 2010?