Question
The Shop has been operating using the gross purchases method under a perpetual inventory system.All of the Shop's suppliers are GST registered (15%), as well,
The Shop has been operating using the gross purchases method under a perpetual inventory system.All of the Shop's suppliers are GST registered (15%), as well, and all purchases and sales take place on credit. Management has decided to use the James brand of basketball for this exercise. On 1 July, there was a balance of $2,300 in Accounts Payable relating to a James basketball purchase completed in June. Had the net purchases method been used, the balance would have been $2,254.
12 July Received $2,254 from Westbrook Ltd within the discount period, representing payment for of the invoiced amount.
If the credit to accounts receivable is for $2,300, what is the dollar amount of the debit to GST clearing? If there should not be a debt to GST clearing, specify so. Assume GST is 15%.
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