How should the collection of delinquent taxes amounting to $330,000, including accrued interest and penalties, be recorded?

The collection of delinquent taxes, which includes accrued interest and penalties, should be recorded by first recognizing the revenue associated with both the principal amount of the taxes and any accrued interest and penalties. This is why the correct handling involves debiting Interest and Penalties Receivable to adjust for the expected inflow associated with those components and crediting Revenues Control to recognize the income.

Following this initial entry, the actual collection of cash should then be recorded, typically by debiting Cash and crediting the various receivable accounts involved. This dual-step process ensures that both the revenue recognition and the actual receipt of funds reflect the comprehensive nature of the delinquent tax collection, providing a clear and accurate representation of the financial transactions involved.

This method aligns with the principles of governmental accounting, which require that all income and receivables be accurately captured in the financial records to ensure transparency and fiscal responsibility. The other options do not appropriately record both the interest and penalties or confuse the flow of revenue and expenditures, failing to provide a complete picture of the transaction's financial implications.