Flint Ltd., a private company following ASPE, is a merchant and operates in the province of Ontario, where the HST rate is 13%. Flint uses
Flint Ltd., a private company following ASPE, is a merchant and operates in the province of Ontario, where the HST rate is 13%. Flint uses a perpetual inventory system. Transactions for the business for the month of March and April are as follows:
| Mar. | 1 | | Paid March rent to the landlord for the rental of a warehouse. The lease calls for monthly payments of $5,100 plus 13% HST. |
| | 3 | | Sold merchandise on account and shipped merchandise to Marcus Ltd. for $19,200, terms n/30, f.o.b. shipping point. This merchandise cost Flint $13,600. |
| | 5 | | Granted Marcus a sales allowance of $800 (exclusive of taxes) for defective merchandise purchased on March 3. No merchandise was returned. |
| | 7 | | Purchased merchandise for resale on account from Tinney Ltd. at a list price of $4,100, plus applicable tax. |
| | 12 | | Purchased a desk for the shipping clerk, and paid by cash. The price of the desk was $800 before applicable tax. |
| Apr. | 15 | | Paid the monthly remittance of HST to the Receiver General for Canada. |
| | 30 | | Paid the monthly PST remittance to the Treasurer of the province (where applicable). |
QUESTIONS:
A) Prepare the journal entries to record these transactions on the books of Flint Ltd
(To record sales on account)
(To record cost of goods sold)
B) Assume instead that Flint operates in the province of Alberta, where PST is not applicable. GST is charged at the rate of 5%. Prepare the journal entries to record these transactions on the books of Flint.
(To record sales on account)
(To record cost of goods sold)
C) Assume instead that Flint operates in a province where 10% PST is also charged on the 5% GST. Prepare the journal entries to record these transactions on the books of Flint. Rental payments and inventory purchased for resale are PST-exempt.
(To record sales on account)
(To record cost of goods sold)
Here is a list of accounts that you can use to create the journal entries:
Accounts Payable Accounts Receivable Accretion Expense Accumulated Depletion - Mineral Resources Accumulated Depreciation - Drilling Platform Accumulated Depreciation - Oil Tanker Depot Asset Retirement Obligation Bonus Expense Bonus Payable Cash Container Sales Revenue Cost of Goods Sold CPP Contributions Payable Current Tax Expense Depreciation Expense Dividends Payable Drilling Platform EI Premiums Payable Employee Benefit Expense Employee Income Tax Deductions Payable Estimated Inventory Returns Estimated Liability for Premiums Equipment Freight in Furniture Gain on Settlement of ARO GST Payable GST Receivable HST Payable HST Receivable Income Tax Expense Income Tax Payable Income Tax Receivable Interest Expense Interest Payable Inventory Inventory of Premiums Land Improvements Liability for Guarantee Litigation Expense Litigation Liability Loss Due to Environmental Clean-up Loss on Expropriation Loss on Guarantee Loss on Settlement of ARO Materials, Cash, Payables Mineral Resources No Entry Notes Payable Notes Receivable Oil Tanker Depot Parental Leave Benefits Payable Payroll Tax Expense Premium Expense Premium Liability Property Tax Expense Property Tax Payable PST Payable Purchase Discounts Purchase Discounts Lost Purchase Returns and Allowances Purchases Refund Liability Rent Expense Rent Payable Rent Revenue Retained Earnings Returned Inventory Salaries and Wages Expense Salaries and Wages Payable Sales Returns and Allowances Sales Revenue Sales Tax Payable Service Revenue Sick Pay Wages Payable Trucks Unearned Revenue Union Dues Payable Vacation Wages Payable Warranty Expense Warranty Liability Warranty Revenue
