For the month of October, Kingston Sales Ltd. had the following transactions:

• $175,000 in sales plus HST; 30% of which were on account, the remaining sales were cash. The cost of the inventory sold in the month totaled $80,000.

• $50,000 in purchases of inventory plus HST. All purchases are on account.

• $25,000 in purchases of payroll and accounting services plus HST. All purchases were paid in cash, and were used in the month of October.

At the beginning of October, the balance in Kingson’s HST accounts were as follows:

HST Receivable: $12,000

HST Payable: $16,000

HST in the province of New Brunswick, where Kingston is located, is 15%.

Required (15 marks):

a) Prepare the journal entries associated with the October transactions for Kingston Sales Ltd.

b) Calculate the net amount of HST that Kingston will either owe to the government, or receive from the government as of the end of October. Show your calculations.

Answer rating: 100% (QA)

a General Journal Debit Credit Accounts receivable 30 x ... View the full answer