Question

question 1. P10-1B On January 1, 2018, Burlington Inc.’s general ledger contained these opening balances for its liability accounts:

Accounts payable	$52,000
CPP payable	3,810
EI payable	1,598
Sales tax payable	18,000
Employee income tax payable	7,700
Unearned revenue	16,000

The following selected transactions occurred during the month.

Jan.  5	Sold inventory for cash totalling $20,000, plus 5% GST and 7% PST. The cost of goods sold was $14,000. Burlington uses a perpetual inventory system.
13	Paid $18,000 ($7,500 GST to the Receiver General and $10,500 PST to the provincial Minister of Finance) for sales taxes collected in December.
14	Paid $13,108 to the Receiver General for amounts owing from the December payroll for the employee payroll deductions of $10,271 (CPP $1,905, EI $666, and employee income tax $7,700) and employee benefits of $2,837 (CPP $1,905 and EI $932).
15	Borrowed $18,000 from HSBC Bank for three months; 6% interest is payable monthly on the 15th of each month.
19	Provided services for customers who had made advance payments of $11,200. This amount includes applicable GST and PST, which is not payable until the related revenue is earned.
22	Paid $32,000 to trade creditors on account.
28	Received assessment of property taxes of $4,200 for the calendar year. They are payable on March 1.
29	Paid employees for the month. Gross salaries totalled $40,000 and payroll deductions included CPP of $1,980, EI of $752, and employee income tax of $9,474. Employee benefits included CPP of $1,980 and EI of $1,053.

Instructions

(a) Record the above transactions.

(b) Record any required adjusting entries at January 31.

(c) Prepare the current liabilities section of the statement of financial position at January 31.

Answer 1

A.

Jan 5	Cash A/c           To Gst A/c           To PST A/c           To Sales A/c	Dr. Cr. Cr. Cr.	20000	1000 1400 17600
Jan 13	Gst A/c PST A/c            To Cash A/c	Dr. Dr. Cr.	7500 10500	18000
Jan 14	CPP Payable A/c EI Payble A/c Employee Income tax Payble A/c            To Cash A/c	Dr. Dr. Dr. Cr.	3810 1598 7700	13108
Jan 15	HSBC Bank A/c            To HSBC Loan A/c	Dr. Cr.	18000	18000
Jan 19	Unearned Revenue A/c         To Services A/c           To Gst A/c           To PST A/c	Dr.	11200	10000 500 700
Jan 22	Accounts Payable A/c           To Cash A/c	Dr. Cr.	32000	32000
Jan 28	No Entry
Jan 29	Salary A/c           To CPP A/c           To EI A/c           To Employee Income tax payable A/c           To Cash A/c	Dr. Cr. Cr. Cr Cr.	40000	3960 1805 9474 24761

B.

Adjustment Entries

Jan 31	Sales A/c              To Gross Profit A/c	Dr. Cr.	3600	3600
Jan 31	Interest A/c To Outstanding Interest A/c (Being Interest outstanding for 15 days. (18000)*(.06)*(15/30))	Dr.	540	540

C.

Accounts payable	20000                  (52000-32000)
CPP payable	3960                   (3810-3810+3960)
EI payable	1805                   (1598-1598+1805)
Sales tax payable	3600                   (18000+1000+1400-7500-10500+500+700)
Employee income tax payable	9474                   (7700-7700+9474)
Unearned revenue	4800                   (16000-11200)