1 The Demonstration Problem below includes an Action Plan and electronic Working Papers (in Excel). Download the Working Papers and complete the problem, using the Action Plan (be sure to save your work). Once you've completed the problem, you can compare to the Solution, also available below. Problem 2 On March 1, 2024, the ledger of Davis Company contains the following liability accounts: Accounts Payable HST Payable Unearned Service Revenue $38,600 4,900 14,000 Davis uses a perpetual inventory system. Merchandise costs 65% of selling price before taxes. During March the following selected transactions occurred: Mar. 1 Borrowed $24,000 cash on a six-month 6%, note. 5 Sold merchandise for cash totalling $8, 100, plus 13% HST. 12 Provided services for customers who had made advance payments of $7,000. (Credit Service Revenue. Ignore any sales tax implications for this service revenue.) 14 Paid the Receiver General for Canada the March 1 balance owing for HST. 20 Sold 500 units of Product A on credit at $47 per unit, plus 13% HST. 22 Gave a customer a credit of $1,100, plus 13% HST, for returned merchandise that did not meet the specifications required by the customer. (Hint: the taxes on this transaction will reduce the taxes payable.) 25 Sold merchandise for cash totalling $13,500, plus 13% HST. 31 The gross payroll for March is $6,400. The company deducted $295 for CPP, $110 for El, and $1,280 for income taxes from the employees' salaries. The employees are paid monthly at the end of the month. (Record only the employee