ACCT 1000 Hiking is Fun Inc. (serial exercise) - Part 3

J. NoskovaPage 1 of 3

It is spring 2017. Winter was quiet; however, you kept busy planning for the tourist season coming up. You have set up Hiking Is Fun facebook and diligently followed up on all business leads. You were able to generate some revenues providing guided crosscountry ski trips to a group of tourists from Australia. Following information is required to allow you to process transactions for the third and the fourth quarters:

Since your total revenue will most likely exceed $ 30,000 threshold (see part 1 above) you have to register with Canada Revenue Agency and collect GST. You will report and remit GST annually. The registration date is April 1, 2017. You booked a few trips to take place in August and received $ 13,000 in deposits. Advertising expense invoice was received and posted on March 3. The amount of the invoice was $ 150.00. All journal entries for October 2016 - March 2017 have already been prepared and posted.

Listed below are business events for the third and the fourth quarter of the year you need to record. Prepare the journal entries using the template in Term project, Part 3 submission booklet.1. An invoice for advertising expenses ($ 150.00), recorded in March is due on April 3.April 3 Record the payment on account. 2. The company is planning to sell baseball hats with Hiking Is Fun logo.The selling price is set at $ 15 each plus GST 5%. The hats were purchased from two suppliers. Since cash is tight at this time of the year you successfully negotiated with the supplier the favorable payment terms which are n30 (meaning the invoice doesn't have to be paid until 30 days from the date of the invoice).May 15 - purchase of 100 hats at the cost of $ 7.50 per hat + GST. Total invoice amountincluding tax is $ 787.50.May 28 - purchase of 150 hats at the cost of $ 8.00 per hat. Total invoice amount including GST is $ 1,260. You decided to use the average cost method to calculate the cost of inventory. Record inventory purchases for May 15, May 28. 3. The annual interest on the bank loan was paid on May 31. See Part 1 for loan details. Hint: Record the entry as follows: Interest payablexxxx Interest expensexxxxCashxxxx 4. Car insurance purchased on June 1, 2016 expired on May 31. Adjust prepaid insurance account accordingly. (See Part 2 for details on the balance in prepaid insurance account). 5. On June 1, car insurance $ 2,400 was purchased for 12 months period. Record payment of the insurance (paid in cash).6. Hiking Is Fun provided guiding services in the months of May and June as follows: May - $ 15,750 (includes $ 750 GST) paid in cash. o Record guiding revenues for the month of May. June - $ 18,900 (includes 900 GST) - $ 5,900 paid in cash, remainder prepaid by deposits received in March ($ 13,000). o Record guiding revenues for the month of June. 7. The tourists love the baseball hats with Hiking Is Fun logo. 47 hats were sold for $ 15 each plus 5% GST.

ACCT 1000 Hiking is Fun Inc. (serial exercise) - Part 3

J. NoskovaPage 2 of 3

Record the sales transaction using June 30 as the date. Do not forget to calculate the average cost and record the cost of sales accordingly (use the inventory template - optional). 8. All other expenses incurred in the third quarter are as follows (paid for in cash): Rent expenses - $ 3,000 Telephone expenses $ 700 + $ 35 GST Utilities expenses $ 135 + $ 6.65 GST Fuel expenses $ 400 + $ 20 GST Record the payment of expenses above as one journal entry (use June 30 date). 9. Time to pay yourselves.The dividends of $ 4,000 were declared and paid in cash on July 1($ 2,000 each). Record the payment of dividends.

10. You looked at the opportunities to expand the services and decided to organize canoe tours around Bowron Lakes.On July 2 the purchased 5 canoes at a cost of $ 1,800 each (total invoice including GST is $ 9,450). The depreciation will be based on the number of days used. After some "head scratching" you were able to come up with an estimate of total usage in days - (500 days each). The estimated salvage value when sold is $ 500 each. This information will be relevant to calculate the depreciation expense and necessary adjusting entry at the end of the fiscal year 2017. Record the purchase of canoes (use Boating equipment as account name). They were paid for Cash (don't forget to record GST).

11. On July 15, you provided services to the group of Austrian tourists who booked trip last year (see Part 2). The trip cost is $ 12,000 + GST; however, you only received $ 11,600 since the deposit of $ 1,000 was received last year and recorded as Unearned Revenues (see Part 2 for more details). Record the transaction. 12. You hired an employee (Amanda Hika) who will earn salary $ 2,000 per month. Amanda's contract is for the month of July only. She will be paid on the last day of the month. Based on the CRA payroll tables you will have to deduct income tax, CPP (Canada Pension Plan) and EI (Employment Insurance) premiums from Amanda's paycheque. The amounts are as follows (rounded to the nearest dollar): o Tax - $ 150 o CPP - $85 o EI -$ 33 o Paycheque amount- $ 1,732

You recall from your accounting class that the employer also has to contribute to CPP (1 times employee's contribution) and EI (1.4 times employee's contribution) programs and the money has to be remitted to Canada Revenue Agency by the 15th of the month following the month of the payroll. Record salary payment dated July 31. Record employer's portion of CPP and EI for July.

ACCT 1000 Hiking is Fun Inc. (serial exercise) - Part 3

J. NoskovaPage 3 of 3

13. The hats are very popular. By the end of the month you sold 110 hats (price is $ 15 each + GST). Record the sale transaction using July 31 as a date (don't forget to record Cost of Goods Sold using the average cost calculated on June 30.

14. On August 1 the company purchased additional baseball hats. Unfortunately, the cost went up slightly. The purchase details are as follows: 200 hats at the cost of $ 9.00 per hat Total invoice amount including tax is $ 1,890. Record the purchase of these inventory items in cash. 15. On Aug 15 you paid payroll deductions and employer portion of CPP and EI premiums for June ($ 399.20). Record payment of payroll taxes. 16. Revenues (all paid for by cash - remember to include GST in the revenue transaction) to be recorded for the month of August and September are as follows (use September 30 to date this transaction): Service revenues $ 54,000 + GST Hat sales$ 160 hats for $18 each + GST (price increased by $ 2 per hat).(Do not forget to recalculate the average cost per hat, it is recommended to use theinventory template to keep track of the transactions)

Required:

Journalize transactions 1 - 16.

Submission instructions:

Submit the report for marking (paper