Question
Gibco Limited has an October 31 year end. On October 1, 2020 Gibco had the following current liabilities listed on its books: Bank credit line
Gibco Limited has an October 31 year end. On October 1, 2020 Gibco had the following current liabilities
listed on its books:
Bank credit line ................................................ $23,250
Accounts payable ............................................. 100,500
CPP, EI and income tax payable ...................... 9,620
Unearned revenues ........................................... 12,000
During October 2020 Gibco engaged in the following transactions:
Oct 1 Paid $20,000 on the line of credit with their bank to replace the bank overdraft.
Oct 5 Sold goods worth $30,000 on which they had previously received a $12,000 deposit. The balance is due
in 30 days.
Oct 12 Bought $20,000 of inventory on credit, terms of 30 days.
Oct 15 Paid amounts due the Government of Canada for the payroll amounts outstanding from September 30.
Oct 20 Paid $87,000 owing to a supplier.
Oct 21 Received $5,000 from a client for work that will be performed in January 2021.
Oct 21 Sold $56,000 of goods half for cash, half on credit.
Oct 30 Paid the monthly payroll amounts to employees. The gross payroll was $16,200. Amounts withheld
from the employees' cheques were as follows:
Canada pension plan premiums (CPP) $802
Employment insurance premiums (EI) $259
Income tax $2,800
At this time, the company also recorded their liability for amounts due to the government for CPP and
EI.
Oct 31 Declared $5,000 of dividends payable next year.
Instructions
a) Prepare all of the journal entries required as a result of the above transactions.
b) Prepare the current liabilities section of the statement of balance sheet at October 31, 2020.
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