Question

Question 2 - Taxes Payable lect transactions and other information pertaining to the Best Place in the World Inc. (BPW) detailed below. Current HST rate is used in the calculations Facts: a. I'W is based in Fredericton, New Brunswick and all purchases and sales are made in NB. b. The balances in BPWs HST recoverable account and HST pavable account as at March 31, 2020, were $7,000 and $18,000, respectively. c. BPW uses a perpetual inventory system. d. Inventory is sold at a 100% mark-up on cost. (Cost of goods sold is 50% of the sales price.) Select transactions in April 2020: 1. BPW purchased inventory on account at a cost of $17,000 plus HST. 2. BPW purchased equipment on account at a cost of $18,000 plus HST. It paid an additional $600 plus HST for shipping. 3. Cash sales-BPW sold inventory for $45,000 plus HST. 4. Sales on account-BPW sold inventory for $35,000 plus HST. 5. BPW paid the supplier in full for the equipment previously purchased on account. 6. At the end of the month, BPW remitted the net amount of HST owing to the Canada Revenue Agency. Required: Prepare summary journal entries to record the transactions detailed above. Date Explanation/Account Debit Credit
prepare summary journal entries to record the transaction detailed above

Answer 1

Answer:

Date Credit Debit $ Explanation/Account Inventory HST Recoverable ($17,000 x 12%) Account payable 17,000 2,040 $ 19,040 2 Equipment ($18,000 + $600) HST Recoverable ($18,600 x 12%) Account payable 18,600 2,232 20,832 50,400 3 Cash Sales HST payable ($45,000 x 12%) 45,000 5,400 22,500 Cost of goods sold ($45,000 x 50%) Inventory 22,500 39,200 4 Account receivable Sales HST payable ($35,000 x 12%) 35,000 4,200 17,500 Cost of goods sold ($35,000 < 50%) Inventory 17,500 20,832 5 Account payable Cash 20,832 27,600 6 HST payable HST recoverable Cash 11,272 16,328