Potomac Resort and Spa completed the following select transactions during June 2021. The company has a June 30, 2021 year-end:

1. Accounts payable had a beginning balance of $3,500. During the month, the company made $4,000 in purchases on account and remitted $2,000 to vendors.
2. The company pays employees twice a month, on the 15^th and the 30^th of each month. Source deductions for the entire month are remitted at the beginning of the following month.
   1. The income taxes to be withheld are 25% of gross wages.
   2. Canada Pension Plan contributions are 5.1% and Employment Insurance premiums are 1.62% of the employee’s gross wages. The employer matches the employees CPP contributions and pay 1.4 times the employees EI premiums.
   3. Payroll for June 1^st to June 15^th was $18,000.
   4. Payroll for June 16^th to June 30^th was $19,500.
3. June sales totaled $30,000 with the company collecting GST of 5%.
4. The company paid for supplies worth $4,800 and spa equipment worth $12,000 during the month. The company paid GST of 5% on each purchase. The company remits GST in the following month.
5. During the year, the company received $15,000 in advance through the sale of gift certificates. By the end of the year, the company had earned 60% of the unearned revenue. The company expects customers to redeem the gift certificates by the end of next year.
6. On May 1^st, the company borrowed $50,000 on a 5 year note payable with an interest rate of 6%. The company has agreed to make annual payments of $10,000 along with any accrued interest (first payment due May 1, 2022).
7. On January 1, 2021, the company issued a 5 year, 4%, $300,000 bonds at 90. The market rate was 5%. The bonds pay interest semi-annually with the first payment to be issued July 1, 2021. The company will amortize the bond using the effective interest rate method.

Required

1. Calculate how much the company will remit in payroll source deductions and GST in July 2021.
2. Prepare the liability section of the balance sheet for the company as of June 30^th. Ensure to classify amounts as current or long-term.

Question 2 

Cobalt Industries started operations in 2019 with unlimited authorized shares for common and 10,000 authorized shares for preferred. In 2019, 15,000 common shares were issued for cash of $13 per share. The company also issued 1,200, $4.00 preferred shares for cash of $10 per share. Preferred shares are cumulative.

The following table reports the revenues the company was able to generate, expenses incurred and dividends paid each year. The company has a December 31^st year end.

Year	Revenues	Expenses	Dividends Paid
2019	$240,000	$245,000	$0
2020	$295,000	$210,000	$3,500
2021	$350,000	$270,000	$15,000

Required

1. Calculate the ending balance of Retained Earnings for each year of operations.
2. Prepare the shareholder’s equity section for 2021 for the company. Journal entries are not required.
3. Calculate the dividends owed and paid to common and preferred shareholders for each year.

Answer rating: 100% (QA)

1 Calaculation of Payroll source deduction Gross wages for the month 37500 Income tax a... View the full answer