Question

Assignment #10

The general ledger of Sunrise Ltd.’s shows the following selected liability accounts on December 1, 2019:

Accounts payable	$42,500
CPP payable	$1,980
EI payable	$902
Sales tax payable	$6,224
Employee income tax payable	$7,337
Unearned revenue	$25,990

Sunrise Security Equipment and Services Ltd.’s business year ends on December 31. The company is using a perpetual inventory system. The following transactions occurred during the month of December:

Date	Description
Dec, 1	Issued a three-month, 6% note payable in exchange for an account payable in the amount of $10,000. Interest is due at maturity.
6	Purchased inventory on account at a cost of $28,000, plus 13% HST.
8	Sold inventory for cash totalling $32,000, plus 13 % HST. The cost of goods sold was $14,000.
10	Paid for inventory purchased on Dec. 6
14	Provided service for customers who had made advance payments of $19,775 including HST, which is not payable until the related service occurs (Note: the actual sale occurs when the service is provided: i.e.: now!)
15	Paid $6,224 HST to the Receiver General for sales tax collected in November.
17	Paid $10,219 to the Receiver General for the amount owing from the November payroll for employee payroll deduction of $8,703 (CPP $990, EI $376, and employee income tax $7,337) and for employee benefits of $1,516 (CPP $990 and EI $526).
20	Signed a contract to provide security services to a small apartment complex, starting in January 2020, and collected six months’ fees in advance, amounting to $40,680 including HST, which is not payable until the related service occurs.
26	Paid $23,000 to supplier for inventory bought last month.
30	Calculated the payroll, which results in gross salaries of $22,000, payroll deductions for CPP $1,089 and EI $413, payroll deductions for employee income tax $8,071, employer benefits for CPP (matching) and EI $578. Employees are paid in cash, but payments for the corresponding payroll deductions have not yet been made.

Additional information

The company received the property tax bill of $12,000 for the calendar year on March 31, 2019 and paid it on May 31. On the date the bill arrived, the bookkeeper recorded the property tax expense for the first three months. On the date the bill was paid, additional two months were recorded as expense. The remaining payment was recorded as Prepaid Property Tax. No further adjustments have been made since.

Instructions

a) Record the above transactions

b) Record any required adjusting entries at December 31, 2019. In addition, record the adjustments for the property tax expense (see additional information).

c) Prepare the current liabilities section of the statement of financial position at December 31, 2019.

Answer 1

1

Account Payable(VENDOR)
Date	Particulars	Amount	Date	Particulars	Amount
01-12-19	6% Note	10000	01-12-19	BY Balance B/d	42500
23-12-19	TO Cash	23000
10-12-19	TO CASH	31640	06-12-19	By Purchase	28000
31-12-19	To Balance C/d	9500	06-12-19	By HST A/c	3640
		74140			74140
CPP Payable
Date	Particulars	Amount	Date	Particulars	Amount
17-12-19	TO CASH	1980	01-12-19	BY Balance B/d	1980
			30-12-19	Salary A/c	1089
30-12-19	BY Balance C/d	2178	30-12-19	Employer Contribution	1089
		4158			4158
EI Payable
Date	Particulars	Amount	Date	Particulars	Amount
17-12-19	TO CASH	902	01-12-19	BY Balance B/d	902
			30-12-19	Salary A/c	413
30-12-19	BY Balance C/d	991	30-12-19	Employer Contribution	578
		1893			1893
Sales Tax Payable
Date	Particulars	Amount	Date	Particulars	Amount
15-12-19	TO CASH	6224	01-12-19	BY Balance B/d	6224
06-12-19	TO Vendor	246.09	08-12-19	By Customer A/c	4160
			14-12-19	By Customer A/c	2275
31-12-19	BY Balance C/d	10868.91	20-12-19	By CASH	4680
		17339			17339
Employee income tax
Date	Particulars	Amount	Date	Particulars	Amount
15-12-19	TO CASH	7337	01-12-19	BY Balance B/d	7337
30-12-19	BY Balance C/d	8071	30-12-19	Salary A/c	8071
		15408			15408
Unearned Revenue
Date	Particulars	Amount	Date	Particulars	Amount
14-12-19	TO Customer	19975	01-12-19	BY Balance B/d	25990
31-12-19	To Balance C/d	6015
		25990			25990
Purchase
Date	Particulars	Amount	Date	Particulars	Amount
06-12-19	TO Vendor	28000
Sale a/c
Date	Particulars	Amount	Date	Particulars	Amount
			08-12-19	BY Custmer	32000
			14-12-19	BY Custmer(Services)	17500
Custmer
Date	Particulars	Amount	Date	Particulars	Amount
08-12-19	To Sale	32000	08-12-19	By CASH	36160
08-12-19	TO HST A/c	4160
14-12-19	TO SAle	17500	14-12-19	By Unearned Revenue	19775
14-12-19	TO HST A/c	2275	31-12-19	BY Balance C/d	0
		55935			55935
Advance Received
Date	Particulars	Amount	Date	Particulars	Amount
31-12-19	To Balance C/d	40680	20-12-19	By CASH	40680
6% Note payable
Date	Particulars	Amount	Date	Particulars	Amount
			01-12-19	BY Account Payable	10000
			31-12-19	By Accrued Intrest	200
Salary A/c
Date	Particulars	Amount	Date	Particulars	Amount
30-12-19	TO Cash	12427
	CPP	1089
	EI	413
	Employee income tax	8071

2
Property Tax
Date	Particulars	Amount	Date	Particulars	Amount
31-05-19	TO Bank	12000	31-01-19	BY Property Tax Exp	1000
			28-02-19	BY Property Tax Exp	1000
			31-03-19	BY Property Tax Exp	1000
			30-04-19	BY Property Tax Exp	1000
			31-05-19	BY Property Tax Exp	1000
			31-05-19	TO Prepaid property Tax	7000
31-12-19	TO Prepaid PropertyTax	7000	31-12-19	BY Property Tax Exp	7000

3
Liability A/c
Date	Particulars	Amount	Date	Particulars	Amount
				Advance Received	40680
				Account Payable	9500
				CPP Payable	2178
				EI Payable	991
				Sales Tax Payable	10868.91
				Employee Income Tax	8071
				Unearned Revenue	6015
				Total	78303.91