The following are selected transactions of Sarasota Department Store Ltd. for the current year ended December 31. Sarasota is a private company operating in the province of Manitoba where PST is 8% and GST is 5%. PDSL follows ASPE and has a periodic inventory system.

Prepare all the journal entries necessary to record the above transactions when they occurred and any adjusting journal entries relative to the transactions that would be required to present financial statements at December 31 in accordance with GAAP.

1.		On February 2, Sarasota placed an order to buy goods for resale from Hashmani Limited for $ 49,000 plus GST. Terms of purchase are f.o.b. destination, net 15. The goods arrived February 6 and the invoice was paid on February 20.
2.		On April 1, Sarasota purchased a truck for $ 49,000 from Schuler Motors Limited, paying $ 11,270 cash and signing a one-year, 8% note for the balance of the purchase price. Provincial sales tax of 8% and GST of 5% were charged by the supplier on the purchase price.
3.		On May 1, Sarasota borrowed $ 71,000 from First Provincial Bank by signing a $ 74,000 non–interest-bearing note due one year from May 1.
4.		On June 30 and December 31, Sarasota remitted cheques for $ 20,300 each as instalments on its current year tax liability.
5.		On August 14, Sarasota's board of directors declared a $ 23,000 cash dividend that was payable on September 10 to shareholders of record on August 31.
6.		On December 5, Sarasota received $ 600 from Jefferson Ltd. as a deposit on a trailer that Jefferson is using for an office move. The deposit is to be returned to Jefferson after it returns the trailer in good condition on January 15. (Hint: Use the account Refund Liability.)
7.		On December 10, Sarasota purchased new furniture and fixtures for $ 6,000 on account. Provincial sales tax of 8% and GST of 5% were charged by the supplier on the purchase price.
8.		During December, cash sales of $ 82,000 were recorded, plus 8% provincial sales tax and 5% GST that must be remitted by the 15th day of the following month. Both taxes are levied on the sale amount to the customer. Ignore any cost of goods sold.
9.		Sarasota’s lease for its store premises calls for a $ 3,100 monthly rental payment plus 3% of net sales. The payment is due one week after month end.
10.		Sarasota was advised during the month of December that it is legally required to restore the area (considered a land improvement) surrounding one of its new store parking lots, when the store is closed in 12 years. Sarasota estimates that the fair value of this obligation at December 31 is $ 95,000.
11.		The corporate tax return indicated taxable income of $ 206,300. Sarasota’s income tax rate is 20%.

Answer rating: 100% (QA)

Solution SNo Date Particulars Debit Credit 1 06Feb Purchases ac 49000 Input GST ac 2450 WNo1 To Hasmani Ltd 51450 Being goods purchased for resale Goods are accounted at the time of entry 20Feb Hasman... View the full answer