The following are selected transactions of Novak Department Store Ltd. for the current year ended December 31. Novak is a private company operating in the province of Manitoba where PST is 8% and GST is 5%. PDSL follows ASPE and has a periodic inventory system. On February 2, Novak placed an order to buy goods for resale from Hashmani Limited for $48,000 plus GST. Terms of purchase are f.o.b. destination, net 15. The goods arrived 1. February 6 and the invoice was paid on February 20. (Hint: Inventory for resale is purchased PST exempt.) On April 1, Novak purchased a truck for $48,000 from Schuler Motors Limited, paying $11,040 cash and signing a one-year, 8% note for the balance of the purchase price. 2. Provincial sales tax of 8% and GST of 5% were charged by the supplier on the purchase price. On May 1, Novak borrowed $79,000 from First Provincial Bank by signing a $91,000 non-interest-bearing note due one year from May 1 3. On June 30 and December 31, Novak remitted cheques for $18,800 each as instalments on its current year tax liability. 4. On August 14, Novak's board of directors declared a $11,000 cash dividend that was payable on September 10 to shareholders of record on August 31. 5. On December 5, Novak received $1,600 from Jefferson Ltd. as a deposit on a trailer that Jefferson is using for an office move. The deposit is to be returned to Jefferson after it returns the trailer in good condition on January 15. (Hint: Use the account Refund Liability.) 6. On December 10, Novak purchased new furniture and fixtures for $11,000 on account. Provincial sales tax of 8% and GST of 5% were charged by the supplier on the purchase price 7. During December, cash sales of $84,000 were recorded, plus 8% provincial sales tax and 5% GST that must be remitted by the 15th day of the following month. Both taxes are levied on the sale amount to the customer. Ignore any cost of goods sold 8. Novak's lease for its store premises calls for a $2,700 monthly rental payment plus 3% of net sales. The payment is due one week after month end. 9. Novak was advised during the month of December that it is legally required to restore the area (considered a land improvement) surrounding one of its new store parking lots, when the store is closed in 12 years. Novak estimates that the fair value of this obligation at December 31 is $85,000 10. The corporate tax return indicated taxable income of $204,800. Novak's income tax rate is 20%. 11. (a) Prepare all the journal entries necessary to record the above transactions when they occurred and any adjusting journal entries relative to the transactions that would be required to present financial statements at December 31 in accordance with GAAP. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry'" for the account titles and enter 0 for the amounts.) The following are selected transactions of Novak Department Store Ltd. for the current year ended December 31. Novak is a private company operating in the province of Manitoba where PST is 8% and GST is 5%. PDSL follows ASPE and has a periodic inventory system. On February 2, Novak placed an order to buy goods for resale from Hashmani Limited for $48,000 plus GST. Terms of purchase are f.o.b. destination, net 15. The goods arrived 1. February 6 and the invoice was paid on February 20. (Hint: Inventory for resale is purchased PST exempt.) On April 1, Novak purchased a truck for $48,000 from Schuler Motors Limited, paying $11,040 cash and signing a one-year, 8% note for the balance of the purchase price. 2. Provincial sales tax of 8% and GST of 5% were charged by the supplier on the purchase price. On May 1, Novak borrowed $79,000 from First Provincial Bank by signing a $91,000 non-interest-bearing note due one year from May 1 3. On June 30 and December 31, Novak remitted cheques for $18,800 each as instalments on its current year tax liability. 4. On August 14, Novak's board of directors declared a $11,000 cash dividend that was payable on September 10 to shareholders of record on August 31. 5. On December 5, Novak received $1,600 from Jefferson Ltd. as a deposit on a trailer that Jefferson is using for an office move. The deposit is to be returned to Jefferson after it returns the trailer in good condition on January 15. (Hint: Use the account Refund Liability.) 6. On December 10, Novak purchased new furniture and fixtures for $11,000 on account. Provincial sales tax of 8% and GST of 5% were charged by the supplier on the purchase price 7. During December, cash sales of $84,000 were recorded, plus 8% provincial sales tax and 5% GST that must be remitted by the 15th day of the following month. Both taxes are levied on the sale amount to the customer. Ignore any cost of goods sold 8. Novak's lease for its store premises calls for a $2,700 monthly rental payment plus 3% of net sales. The payment is due one week after month end. 9. Novak was advised during the month of December that it is legally required to restore the area (considered a land improvement) surrounding one of its new store parking lots, when the store is closed in 12 years. Novak estimates that the fair value of this obligation at December 31 is $85,000 10. The corporate tax return indicated taxable income of $204,800. Novak's income tax rate is 20%. 11. (a) Prepare all the journal entries necessary to record the above transactions when they occurred and any adjusting journal entries relative to the transactions that would be required to present financial statements at December 31 in accordance with GAAP. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry'" for the account titles and enter 0 for the amounts.)
