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Adjusting Entries for Prepaid and Accrued Taxes A-Z Construction Company was organized on May 1...

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Accounting

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Adjusting Entries for Prepaid and Accrued Taxes A-Z Construction Company was organized on May 1 of the current year. On May 2, A-Z Construction prepaid $18,480 to the city for taxes (license fees) for the next 12 months and debited the prepaid taxes account. A-Z Construction is also required to pay in January an annual tax (on property) for the previous calendar year. The estimated amount of the property tax for the current year (May 1 to December 31) is $45,000. a. Journalize the two adjusting entries required to bring the accounts affected by the two taxes up to date as of December 31, the end of the current year. If an amount box does not require an entry, leave it blank License fees Taxes Expense 57.320 X Prepaid Taxes Property tax Taxes Expense 5000 Taxes Payable 4000 Feedback

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