Question

The following selected transactions were completed by Chao Co. during May and June of the current year. The company sells to wholesalers and retail customers. The wholesalers resell the inventory.
May 4. Sold merchandise on account to Robson Co. (a wholesaler), $7,000, terms FOB shipping point, n/eom. The cost of the goods sold was $4,000.
7. Sold merchandise for $15,000 to retail cash customers. The cost of goods sold was $6,000.
10. Sold merchandise on account to Lewis Inc. (a wholesaler), $20,000, terms FOB destination, 3/15, eom. The cost of goods sold was $10,000. The freight charge of $800 was paid.
13. Purchased supplies and inventory on account from Amin Company, for $2,000 and $2,500, respectively.
17. Received cheque for amount due from Lewis Inc. for the sale on May 10.
17. Issued credit memo for $1,000 to Robson Co. for merchandise returned from the sale on May 4. The cost of the goods returned was $600.
Jun. 30. Paid appropriate taxes.
Instructions
Choose the scenario below that best matches the tax rate in your province. Journalize the entries to record the selected transactions for May and June, assuming the perpetual inventory system.
a. The PST is 6%. Paid provincial sales tax payable of $5,500.
b. The PST is 7% and the GST is 5%. Paid provincial sales tax payable of $3,500. Filed GST return. The GST Paid on Purchases account balance was $7,200, and the GST Charged on Sales account balance was $9,300.
c. The HST is 12%. Chao Co. filed its HST return. The HST Paid on Purchases account balance was $5,200, and the HST Charged on Sales account balance was $7,300.


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  • CreatedSeptember 15, 2015
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