Question

Sararas Corporation is a merchant and operates in the province of Ontario, where the HST rate is 13%. Sararas uses a perpetual inventory system. Transactions for the business for the month of March are as follows:
Mar. 1 Paid March rent to the landlord for the rental of a warehouse. The lease calls for monthly payments of $5,500 plus 13% HST.
3 Sold merchandise on account and shipped merchandise to Marcus Ltd. for $20,000, terms n/30, f.o.b. shipping point. This merchandise cost Sararas $11,000.
5 Granted Marcus a sales allowance of $500 (exclusive of taxes) for defective merchandise purchased on March 3. No merchandise was returned.
7 Purchased merchandise for resale on account from Tinney Ltd. at a list price of $14,000, plus applicable tax.
12 Made a cash purchase at Rona of a desk for the shipping clerk. The price of the desk was $600 before applicable taxes.
31 Paid the monthly remittance of HST to the Receiver General.
Instructions
(a) Prepare the journal entries to record these transactions on the books of Sararas Company.
(b) Assume instead that Sararas operates in the province of Alberta, where PST is not applicable. Prepare the journal entries to record these transactions on the books of Sararas.
(c) Assume instead that Sararas operates in the province of Prince Edward Island, where 10% PST is also charged on the 5% GST. Prepare the journal entries to record these transactions on the books of Sararas.


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  • CreatedAugust 23, 2015
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