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Moose Jaw Company operates a store in Moose Jaw, Saskatchewan. They purchased inventory from Brandon Inc. for $100,000. Moose Jaw pays 15% HST in addition
Moose Jaw Company operates a store in Moose Jaw, Saskatchewan. They purchased inventory from Brandon Inc. for $100,000. Moose Jaw pays 15% HST in addition to the cost. (Assume that Saskatchewan uses the same tax system as Nova Scotia.) Moose Jaw then sells the inventory to customers for cash, $250,000.
Required: (For Moose Jaw Company)
- Record the journal entry for the purchase of inventory.
- Record the journal entry for the sale to customers. (Ignore cost of goods sold part of entry.)
- Record the payment to the government for HST.
- Assume that all the products sold by Moose Jaw Company are HST exempt. In other words, Moose Jaw cannot charge HST to its customers for those products. Assume Moose Jaw gets a rent invoice from its landlord for $20,000 plus HST. Record the journal entry to accrue the rent invoice.
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