Question

Record journal entries for the following events.

Jan.1 The Company raises additional funds by selling common shares for $21,300 cash.

Jan.1 The shareholder that the company sold the preferred shares to in 2018 has decided not to pay for them so you cancel the contract with them. The company will take back the shares and cancel them and will eliminate the due from shareholder amount. You find another investor who wants to invest in the preferred shares of the company and this new preferred shareholder pays for these shares today. The value of the preferred shares is equal to $7029.

Jan. 1 The Company pays for a one-year insurance policy using a cheque for $1,800. The company has decided to record this entire payment in the insurance expense account. You will need to create a new account for an insurance expense (try numbering it 5030). You should also set up a new supplier: Bow River Insurance Ltd. and its address is whatever you want it to be. When setting up this supplier, please note that this supplier does not charge GST because they provide insurance, which, is GST exempt. The invoice number is 730. Please note that at the end of February we will adjust for prepaid insurance.

Jan. 10 Remit any GST that was owed to the Receiver General for 2018 – pay with a cheque.

Jan. 16 Red Deer Limited owes an amount from the previous year but pays only the amount pertaining to the oldest invoice outstanding by cheque (their cheque number 238).

Jan. 24 A client phoned you and picked up 10 training manuals, which you sold to her at the standard price of $70. She paid cash. Her name was Annette Moore and she is a one-time client. You charge GST in addition to the $70 price.

Jan. 30 The Company paid for new office supplies. They cost $300.00 including GST not with a cheque but with cash. The vendor is Staples (issuing invoice 874) and you do not want Staples set up as a supplier in your records so treat it as a one-time supplier. Recall from last year you record supplies as administrative expenses.

Jan. 31 Now, record the pay for the company's new employee (and only this employee) by cheque. Be careful to ensure that you fill in the period ending box properly. Hint: view the transaction before posting it and ensure that the program is not crediting vacation pay payable. If it is, ensure you are not retaining the vacation pay.

Jan. 31 You incorrectly recorded the above paycheque. The employee was entitled to a salary of $3,600 per month (for this month and all subsequent months). The employee gives you back the incorrect cheque and you issue a new cheque for the corrected amount. Hint: Be sure that you adjust for the vacation pay and other deductibles relating to the revised cheque.

Answer 1

JOURNAL ENTRIES
DATE			DEBIT	CREDIT
Jan-01	CASH		21300
	TO SHARE CAPITAL ACCOUNT			21300
	(share are issued for funding)
Jan-01	SHARE CAPITAL ACCOUNT		7029
	TO SHARE HOLDER DUE			7029
	(share return back due to non payment)
	BANK		7029
	TO SHARE CAPITAL			7029
	(issue share to new investor)
Jan-01	INSURANCE EXP A/C		1800
	TO BOW RIVER INSURANCE LIMITED			1800
	(insurance due for 5030)
	BOW RIVER INSURANCE LIMITED		1800
	TO BANK ACCOUNT			1800
	(payment maid by cheque)
Jan-10	GST (SGST,CGST,IGST)		-
	TO BANK			-
Jan-16	OUTSTANDING AMOUNT		1
	TO BANK			1
	(outstanding amount paid by chq 238)
Jan-24	CASH A/C		826
	TO TRAINING MATERIAL			700
	TO GST			126
	(sale with GST @ 18%)
Jan-30	ADMINISTRATION EXPENSE		300
	TO CASH			300
	(payment made including GST)
Jan-31	SALARY A/C		3600
	TO BANK			3600
	(payment made to employee)
Jan-31	no entry for wrong check reeturn back without clearing into bank or entry into bank)
Jan-31	SALARY A/C		3600
	TO BANK A/C			3600
	(cancle the old cheque and issue new for payment)