In a governmental fund, recording a property tax levy with an estimated 1% uncollectible, which of the following would be credited to Revenues?

• A. A credit to Revenues for $1,584,000.
• B. A credit to Revenues for $1,600,000.
• C. A credit to Estimated Revenues for $1,584,000.
• D. A debit to Revenues for $1,584,000.

Answer: (A)

In governmental funds, property tax revenue is recognized on a modified accrual basis and net of estimated uncollectibles. If the levy is 1,600,000 and 1% is expected to be uncollectible, the amount that will be collectible and thus recognized as revenue is 1,584,000. Therefore the appropriate recording is to credit Revenues for 1,584,000, reflecting the net collectible portion of the levy. The other options would either imply recognizing the full 1,600,000 as revenue, misclassify the adjustment, or use a debit to revenue, which would not match the way uncollectible estimates are handled in governmental funds.