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Potomac Resort and Spa completed the following select transactions during June 2021. The company has a June 30, 2021 year-end: Accounts payable had a beginning
Potomac Resort and Spa completed the following select transactions during June 2021. The company has a June 30, 2021 year-end:
- Accounts payable had a beginning balance of $3,500. During the month, the company made $4,000 in purchases on account and remitted $2,000 to vendors.
- The company pays employees twice a month, on the 15th and the 30th of each month. Source deductions for the entire month are remitted at the beginning of the following month.
- The income taxes to be withheld are 25% of gross wages.
- Canada Pension Plan contributions are 5.1% and Employment Insurance premiums are 1.62% of the employees gross wages. The employer matches the employee's CPP contributions and pays 1.4 times the employee's EI premiums.
- Payroll for June 1st to June 15th was $18,000.
- Payroll for June 16th to June 30th was $19,500.
- June sales totaled $30,000 with the company collecting GST of 5%.
- The company paid for supplies worth $4,800 and spa equipment worth $12,000 during the month. The company paid GST of 5% on each purchase. The company remits GST in the following month.
- During the year, the company received $15,000 in advance through the sale of gift certificates. By the end of the year, the company had earned 60% of the unearned revenue. The company expects customers to redeem the gift certificates by the end of next year.
- On May 1st, the company borrowed $50,000 on a 5-year note payable with an interest rate of 6%. The company has agreed to make annual payments of $10,000 along with any accrued interest (first payment due May 1, 2022).
- On January 1, 2021, the company issued a 5 year, 4%, $300,000 bond at 90. The market rate was 5%. The bonds pay interest semi-annually with the first payment to be issued July 1, 2021. The company will amortize the bond using the effective interest rate method.
Required
- Calculate how much the company will remit in payroll source deductions and GST in July 2021.
- Prepare the liability section of the balance sheet for the company as of June 30th. Ensure to classify amounts as current or long-term.
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