A City Levies a 2% Sales Tax That Is Collected

question 5

Multiple Choice

A City levies a 2% sales tax that is collected for them by the State.Sales tax must be remitted by the merchants to the State by the 20^th day of the month following the month in which the sale occurred.The State has a policy of remitting sales taxes to the City within 30 days of collection by the State.Cash received by the State related to sales tax is as follows: Amount received 1/20/00, applicable to December 1999 sales $ 50
Amount received 2/20/00, applicable to January 2000 sales $ 15
Amount received 3/20/00, applicable to February 2000 sales $ 10
Amount received during 2000 related to March-November 2000 sales $190
Amount received 1/20/01 for December 2000 sales $ 55
Amount received 2/20/01 for January 2001 $ 20
Amount received 3/20/01 for February 2001 $ 5
Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize as sales tax revenue in its fund financial statements for the fiscal year ended 12/31/00.

• A)$215.
• B)$265.
• C)$270.
• D)$275.

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Definitions:

Cash Manager

An individual or team responsible for managing a company's cash flow to meet operational needs and investment goals.

Cash Cycle

The duration of time it takes a company to convert its investments in inventory and other resources into cash flows from sales.

Firm's Profitability

Indicates how effectively a company generates profit compared to its expenses and other relevant costs.

Inventory Period

The average time it takes for inventory to be sold and converted into cash or accounts receivable.