The Town of Lily Branch anticipated that discount opportunities of up to $3,000 would be taken by their taxpayers. Which of the following statements accurately reflects the accounting for the anticipated discounts when the taxes are levied?
A. Revenues are initially recorded at the entire levy amount. Discounts taken are recorded as expenditures when they are actually taken.
B. Taxes receivable are reduced by the amount of discounts anticipated. The discounts anticipated are recorded as expenditures at the time of the levy.
C. Revenues are recorded at the time of levy net of anticipated discounts. Taxes receivable are recorded at the full levy amount.
D. Revenues are recorded at gross at the time of levy. At collection, taxes receivable are reduced by the gross amount, the discount is recognized as a miscellaneous revenue, and cash is recorded at net.
C
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