2.1 Section 19 of the NGAS Manual for LGUSs, Volume I, requires the Modified
accrual method of accounting to be used for real property taxes. At the beginning
of the year, Real Property Tax Receivable and Special Education Tax Receivable
must be established. This approach acknowledges the need to record in the books
not just income estimates from real property taxes but also actual receivables from
those taxes. However, to avoid appropriating uncollected revenues, which could
lead to a significant cash overdraft, these amounts shall be credited to Deferred
Real Property Taxes Income/Deferred Special Education Tax Income. Real
Property Tax Income/Special Education Tax Income will be recognized upon
receipt of collection.
2.2 Furthermore, Sections 20 and 84 thereof provide that the Real Property Tax
Receivables/Special Education Tax Receivables shall be established at the
beginning of the year based on the Real Property Tax Account
Register/Taxpayer’s index card. At the beginning of the year, the Treasurer shall
furnish the Chief Accountant with a duly certified list showing the name of
taxpayers and the amount due and collectible for the year. Based on the list, the
Chief Accountant shall draw a Journal Entry Voucher (JEV) to record the debit to
Real Property Tax Receivable/Special Education Tax Receivable and credit to the
Deferred Real Property Tax Income/Deferred Special Education Tax Income.
2.3 Upon collection of Real Property Taxes during the year, income is recognized by
crediting Real Property Tax Income while the Deferred Real Property Tax
Income/Deferred Special Education Tax Income is debited. The share of the
Province and Barangay shall also be credited to Due to LGUs.
2.4 Moreover, Sections 36 and 93 of the Manual provide pro-forma accounting entries
in setting up RPT and SET receivables, respectively, receipt of payment, and
distribution of collection, among others, as shown below:
Real Property Tax – Basic and Special Education Tax
a. Setting-up of RPT and SET Receivable
Ex. RPT = P1,000
Account Title Debit Credit
Real Property Tax Receivable 1,000.00
Deferred Real Property Tax Income 1,000.00
Ex. SET
Total Receivables= P500,000
Provincial Share = P250,000 (50%)
Special Education Tax Receivable 500,000.00
Deferred Special Education Tax Income 500,000.00
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