Question
In: Accounting
Flint Ltd., a private company following ASPE, is a merchant and operates in the province of...
Flint Ltd., a private company following ASPE, is a merchant and operates in the province of Ontario, where the HST rate is 13%. Flint uses a perpetual inventory system. Transactions for the business for the month of March and April are as follows:
| Mar. | 1 | Paid March rent to the landlord for the rental of a warehouse. The lease calls for monthly payments of $5,100 plus 13% HST. | |
| 3 | Sold merchandise on account and shipped merchandise to Marcus Ltd. for $19,200, terms n/30, f.o.b. shipping point. This merchandise cost Flint $13,600. | ||
| 5 | Granted Marcus a sales allowance of $800 (exclusive of taxes) for defective merchandise purchased on March 3. No merchandise was returned. | ||
| 7 | Purchased merchandise for resale on account from Tinney Ltd. at a list price of $4,100, plus applicable tax. | ||
| 12 | Purchased a desk for the shipping clerk, and paid by cash. The price of the desk was $800 before applicable tax. | ||
| Apr. | 15 | Paid the monthly remittance of HST to the Receiver General for Canada. | |
| 30 | Paid the monthly PST remittance to the Treasurer of the province (where applicable). |
QUESTIONS:
A) Prepare the journal entries to record these transactions on the books of Flint Ltd
| Mar.1 | Debit | Credit |
| Mar.3 | Debit | Credit |
(To record sales on account)
| Mar.3 | Debit | Credit |
(To record cost of goods sold)
| Mar.5 | Debit | Credit |
| Mar.7 | Debit | Credit |
| Mar.12 | Debit | Credit |
| Apr.15 | Debit | Credit |
B) Assume instead that Flint operates in the province of Alberta, where PST is not applicable. GST is charged at the rate of 5%. Prepare the journal entries to record these transactions on the books of Flint.
| Mar.1 | Debit | Credit |
| Mar.3 | Debit | Credit |
(To record sales on account)
| Mar.3 | Debit | Credit |
(To record cost of goods sold)
| Mar.5 | Debit | Credit |
| Mar.7 | Debit | Credit |
| Mar.12 | Debit | Credit |
| Apr.15 | Debit | Credit |
C) Assume instead that Flint operates in a province where 10% PST is also charged on the 5% GST. Prepare the journal entries to record these transactions on the books of Flint. Rental payments and inventory purchased for resale are PST-exempt.
| Mar.1 | Debit | Credit |
| Mar.3 | Debit | Credit |
(To record sales on account)
| Mar.3 | Debit | Credit |
(To record cost of goods sold)
| Mar.5 | Debit | Credit |
| Mar.7 | Debit | Credit |
| Mar.12 | Debit | Credit |
| Apr.15 | Debit | Credit |
| Apr. 30 | Debit | Credit |
Here is a list of accounts that you can use to create the journal entries:
Accounts Payable
Accounts Receivable
Accretion Expense
Accumulated Depletion - Mineral Resources
Accumulated Depreciation - Drilling Platform
Accumulated Depreciation - Oil Tanker Depot
Asset Retirement Obligation
Bonus Expense
Bonus Payable
Cash
Container Sales Revenue
Cost of Goods Sold
CPP Contributions Payable
Current Tax Expense
Depreciation Expense
Dividends Payable
Drilling Platform
EI Premiums Payable
Employee Benefit Expense
Employee Income Tax Deductions Payable
Estimated Inventory Returns
Estimated Liability for Premiums
Equipment
Freight in
Furniture
Gain on Settlement of ARO
GST Payable
GST Receivable
HST Payable
HST Receivable
Income Tax Expense
Income Tax Payable
Income Tax Receivable
Interest Expense
Interest Payable
Inventory
Inventory of Premiums
Land Improvements
Liability for Guarantee
Litigation Expense
Litigation Liability
Loss Due to Environmental Clean-up
Loss on Expropriation
Loss on Guarantee
Loss on Settlement of ARO
Materials, Cash, Payables
Mineral Resources
No Entry
Notes Payable
Notes Receivable
Oil Tanker Depot
Parental Leave Benefits Payable
Payroll Tax Expense
Premium Expense
Premium Liability
Property Tax Expense
Property Tax Payable
PST Payable
Purchase Discounts
Purchase Discounts Lost
Purchase Returns and Allowances
Purchases
Refund Liability
Rent Expense
Rent Payable
Rent Revenue
Retained Earnings
Returned Inventory
Salaries and Wages Expense
Salaries and Wages Payable
Sales Returns and Allowances
Sales Revenue
Sales Tax Payable
Service Revenue
Sick Pay Wages Payable
Trucks
Unearned Revenue
Union Dues Payable
Vacation Wages Payable
Warranty Expense
Warranty Liability
Warranty Revenue
Solutions
Expert Solution
Answer to Part a
| Date | Account Title and Explanation | Debit | Credit |
| Mar 1 | Rent Expense | $ 5,100 | |
| HST Receivable (5,100 X 13%) | $ 663 | ||
| Cash | $ 5,763 | ||
| Mar 3 | Accounts Receivable - Marcus Ltd. | $ 21,696 | |
| Sales Revenue | $ 19,200 | ||
| HST Payable (19,200 X 13%) | $ 2,496 | ||
| Mar 3 | Cost of Goods Sold | $ 13,600 | |
| Merchandise Inventory | $ 13,600 | ||
| (To record | |||
| Mar 5 | Sales Return and Allowances | $ 800 | |
| HST Payable | $ 104 | ||
| Accounts Receivable - Marcus Ltd. | $ 904 | ||
| Mar 7 | Merchandise Inventory | $ 4,100 | |
| HST Receivable | $ 533 | ||
| Accounts Payable - Tinney Ltd | $ 4,633 | ||
| Mar 12 | Furniture | $ 800 | |
| HST Receivable | $ 104 | ||
| Cash | $ 904 | ||
| Apr 15 | HST Payable | $ 2,392 | |
| HST Receivable | $ 1,300 | ||
| Cash | $ 1,092 | ||
Part b
| Date | Account Title and Explanation | Debit | Credit |
| Mar 1 | Rent Expense | $ 5,100 | |
| GST Receivable | $ 255 | ||
| Cash | $ 5,355 | ||
| Mar 3 | Accounts Receivable - Marcus Ltd. | $ 20,160 | |
| Sales Revenue | $ 19,200 | ||
| GST Payable | $ 960 | ||
| Mar 3 | Cost of Goods Sold | $ 13,600 | |
| Merchandise Inventory | $ 13,600 | ||
| (To record | |||
| Mar 5 | Sales Return and Allowances | $ 800 | |
| GST Payable | $ 40 | ||
| Accounts Receivable - Marcus Ltd. | $ 840 | ||
| Mar 7 | Merchandise Inventory | $ 4,100 | |
| GST Receivable | $ 205 | ||
| Accounts Payable - Tinney Ltd | $ 4,305 | ||
| Mar 12 | Furniture | $ 800 | |
| GST Receivable | $ 40 | ||
| Cash | $ 840 | ||
| Apr 15 | GST Payable | $ 920 | |
| GST Receivable | $ 500 | ||
| Cash | $ 420 | ||
Part c
| Date | Account Title and Explanation | Debit | Credit |
| Mar 1 | Rent Expense | $ 5,100 | |
| GST Receivable | $ 255 | ||
| Cash | $ 5,355 | ||
| Mar 3 | Accounts Receivable - Marcus Ltd. | $ 22,176 | |
| Sales Revenue | $ 19,200 | ||
| GST Payable | $ 960 | ||
| PST Payable | $ 2,016 | ||
| Mar 3 | Cost of Goods Sold | $ 13,600 | |
| Merchandise Inventory | $ 13,600 | ||
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