Jamil Jonas is an accountant in public practice as a sole propreitor. Not long ago, Jamil struck a deal with his neighbour Ralph to prepare Ralph’s business income tax and GST returns for 2020 in exchange for Ralph’s services as a landscaper. Ralph provided labour and used his own equipment to perform landscaping services for Jamil’s personal residence, for which he would normally charge $500. Jamil would usually charge $650 for the number of hours spent completing Ralph’s returns but considers the transaction well worth it since he really dislikes doing his own landscaping.

Instructions

How would each party record this transaction? Prepare the journal entries for both Jamil’s and Ralph’s companies. Ignore any GST/HST that would apply in each transaction.