Ch $4$ Exercise$\_$Solution $-$ Espos...

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A$.$ Omega company pays its employees monthly. For February $2024,$ Omega Co$.\text{'}$s employees had total gross pay of $$770,000.$ Personal income tax was deducted at $23\%$ of total gross pay.

In $2023,$ CPP contributions are $5\mathrm{.}95\%$ for both Omega and its employees. The $2023$ El contribution rate for employees is $1\mathrm{.}66\%$ and Omega must contribute $1\mathrm{.}4$ times the employee amount for its share as the employer. $100\%$ of employees' February earnings are subject to both CPP and EI$.$

Employees' contributions to Omega's group RRSP plan equal to $4\%$ of their gross pay were deducted in February. Omega contributes $50\%$ of the amount contributed by employees and remits the funds to the group RRSP plan.

Omega paid the employees their net pays on Thursday, February $29$th$.$ Omega pays its employees on the last day of work every month. Any remittances other than net pay will be made in March.

Required:

Prepare the journal entry$($ies$)$ on Feb $29$ for Omega to record the February payroll.

B$.$ Koi Inc., a Manitoba$-$based retail kusiness, began operations on February $1,2024.$ During February, Koi purchased a company vehicle for $$50,000$ cash and $$60,000$ of inventory for resale on account.

In February, Koi also sold $\frac{331}{3}\%($i$.$e$.,$ one third$)$ of its inventory for $$40,000.$

As a Manitoba company, all of Koi's purchases and sales were subject to $5\%$ GST$.$ Koi is required to file a GST return with the Canada Revenue Agency quarterly. Koi's first GST return covering the period from February $1$ to April $30$ will be due on May ${31}^{st}.$

Koi is also registered as a vendor under Manitoba's Retail Sales Tax $($RST$),$ which requires Koi to charge $7\%$ on the selling price $($not including GST$)$ of all its sales, and remit the RST collected to the Manitoba government the following month. Koi also must pay Manitoba RST on all its purchases, except those that are exempt from the tax. The inventory purchased for resale was exempt from Manitoba Retail Sales Tax.

Koi uses a perpetual inventory costing system.

Required:

i$.$ Prepare the journal entries to record the February transactions.

ii$.$ How much GST is owed$/$owing $($refund$)$ for February?

iii. How much Manitoba Retail Sales Tax is owed for February.