Question

The following are selected transactions of Grouper Department Store Ltd. for the current year ended December 31. Grouper is a private company operating in the province of Manitoba where PST is 8% and GST is 5%. PDSL follows ASPE and has a periodic inventory system.

9.Grouper’s lease for its store premises calls for a $3,600 monthly rental payment plus 3% of net sales. The payment is due one week after month end.

10.Grouper was advised during the month of December that it is legally required to restore the area (considered a land improvement) surrounding one of its new store parking lots, when the store is closed in 12 years. Grouper estimates that the fair value of this obligation at December 31 is $94,000.

11.The corporate tax return indicated taxable income of $204,800. Grouper’s income tax rate is 20%.

Prepare all the journal entries necessary to record the above transactions when they occurred and any adjusting journal entries relative to the transactions that would be required to present financial statements at December 31 in accordance with GAAP.

Answer 1

solution: Dec 31, $6120 Rental Expense Rental payable $6120 3600+( 37, +84000] 10. Dee 3) parking lot $ 94900 Asset Retirement Obligation 14 9two Dee 31 Income Tax expense $40960 Income Taxes payable! $ 40960 (204800 x 20%) - Tor paid if any Note! 8 Salee value could not give Assume as 84000