By which date must cancellation of uncollectible taxes be completed?

• A. June 30
• B. May 30
• C. July 15
• D. June 15

Answer: (A)

The date reflects the end of the government’s fiscal year, when the books are closed and year-end adjustments are made. Cancellation of uncollectible taxes is an end-of-year write-off to ensure the tax receivables balance shows only amounts that are truly collectable, and that the related loss is recognized in the same reporting period. Doing this by the fiscal-year close (June 30 in this context) keeps financial statements accurate and comparable, and supports a proper audit trail.

Choosing any other date would miss the close of the year, which could delay recognizing the loss or leave uncollectible amounts sitting in assets for the next period, distorting year-to-year comparisons. The exact journal effect is to remove the uncollectible portion from receivables and recognize the associated expense or allowance, aligning assets with expected realizable value.