Question

Skate and Cycle Co. had the following transactions for April. They charge 5% GST and 8% PST on all sales.

April 2	Sold a Nitro 325 Speed Bike to a customer for $700 cash plus applicable taxes. The original cost of the merchandise to Skate and Cycle Co. was $550.
4	Sold two KX225 Mountain Bikes to a customer on account for $200 each plus applicable taxes. The original cost of the merchandise to Skate and Cycle Co. was $135 each.
7	The customer from April 4th returns to the store showing that one of the bikes already has a hole in the seat. Instead of wanting to return it, the customer was satisfied to receive a $50 credit on their account.
23	Customer came in to pay their bill in full from the April 4th transaction.
30	Wrote cheque for PST owing from April, to Minister of Finance.
30	Wrote cheque for GST owing from April, to Receiver General for Canada.

Prepare journal entries to record each of the preceding transactions. Assume a perpetual inventory system. Use appropriate account names from the available chart of accounts & omit explanations.

  

Answer 1

Date	Account Titles	Debit	Credit
Apr-02	Cash	$      791.00
	Sales Revenue		$       700.00
	GST Payable		$         35.00
	PST Payable		$         56.00
	Cost of Goods sold	$      550.00
	Inventory		$       550.00
Apr-04	Accounts Receivable	$      452.00
	Sales Revenue		$       400.00
	GST Payable		$         20.00
	PST Payable		$         32.00
	Cost of Goods sold	$      270.00
	Inventory		$       270.00
Apr-07	Sales Returns and Allowances	$         50.00
	GST Payable	$           2.50
	PST Payable	$           4.00
	Accounts Receivable		$         56.50
Apr-23	Cash	$      395.50
	Accounts Receivable		$       395.50
Apr-30	PST Payable	$         84.00
	Cash		$         84.00
Apr-30	GST Payable	$         52.50
	Cash		$         52.50