Homework SourseModern Electronics Company purchases merchandise inventory f
Modern Electronics Company purchases merchandise inventory from several suppliers. On April 1, 2017, Modern Electronics purchased from Speedy Supplies $80,000 of inventory on account. On May 15, 2017, Modern Electronics sold inventory to a Jones Apartment Complex for $60,000 cash, which included $50,000 COGS for the inventory. On June 15, 2017 Modern Electronics remitted the applicable PST and GST or HST. Use the PST, GST and HST rates in Exhibit 10.6.
Required:
Journalize Modern Electronics Company transactions on April 1, 2017, May 15, 2017 and June 15, 2017, including applicable PST and GST or HST assuming it is located in: (Round the final answer to 2 decimal places.)
a. Ontario
b. British Columbia
c. Alberta
Part a. Modern Electronics is located in Ontario
1.Record the purchase of inventory on credit plus applicable ITC.
2.Record the cash sales plus applicable Sales tax.
3.Record the cost of sales.
4.Record the refund of applicable Sales tax from Receiver General for Canada.
Part b. Modern Electronics is located in British Columbia
1.Record the purchase of inventory on credit plus applicable ITC.
2.Record the cash sales plus applicable Sales tax.
3.Record the cost of sales.
4.Record the refund of applicable Sales tax from Receiver General for Canada.
5.Record the remittance of PST to provincial authority—BC Ministry of Finance.
Part c. Modern Electronics is located in Alberta
1.Record the purchase of inventory on credit plus applicable ITC.
2.Record the cash sales plus applicable Sales tax.
3.Record the cost of sales.
4.Record the refund of applicable Sales tax from Receiver General for Canada.
Ex. 10
PST Rate GST Rate HST Rate Regions with GST Only Alberta 5% 5% 5% 5% Nunavut Yukon Regions with GST and PST British Columbia 7% 8% q.q75% 5% 5% 5% 5% 5% Quebec Regions with HST New Brunswick 13% 15% 15% 13% 14% Nova Scotia Prince Edward Island *A Harmonized Sales Tax (HST) is applied in place of PST and GST. HST is the combination of the PST with the GST for a total sales tax. For example, for both New Brunswick and Ontario the PST rate of 8% is combined with the GST of 5%, resulting in an overall HST of 13% **The Newfoundland 2015 budget announced that the rate increases from 13% to 15%, effective January 1, 2016Solution
Part A. Ontario
Journal Entries
Date
Particulars
Debit
Credit
04/01/2017
Purchase
HST on Purchases – ITC 15%
TO Accounts Payable
80,000
12,000
92,000
05/15/2017
Cash
TO Sales
TO HST Payable on sales 15%
69,000
60,000
9,000
05/15/2017
Cost of goods sold
TO Purchases
50,000
50,000
06/15/2017
HST Payable on sales 15%
HST receivable
TO HST on Purchases – ITC 15%
9,000
3,000
12,000
NOTE: 15% Rate effective from 1st Jan 2016.
PART B: British Columbia
Journal Entry
Date
Particulars
Debit
Credit
04/01/2017
Purchase
GST on Purchases 5%
TO Accounts Payable
(ITC on PST not available)
85,600
4,000
89,600
05/15/2017
Cash
TO Sales
TO GST Payable 5%
TO PST Payable 7%
67,200
60,000
3,000
4,200
05/15/2017
Cost of goods sold
TO Purchases
(5000 x 107%)
53,500
53,500
06/15/2017
GST Payable 5%
GST Receivable
TO GST on Purchases 5%
3,000
1,000
4,000
06/15/2017
PST Payable 7%
TO Cash
4,200
4,200
PART C: Alberta
Journal Entry
Date
Particulars
Debit
Credit
04/01/2017
Purchase
GST on Purchases 5%
TO Accounts Payable
80,000
4,000
84,000
05/15/2017
Cash
TO Sales
TO GST Payable 5%
63,000
60,000
3,000
05/15/2017
Cost of goods sold
TO Purchases
50,000
50,000
06/15/2017
GST Payable 5%
GST Receivable
TO GST on Purchases 5%
3,000
1,000
4,000
| Date | Particulars | Debit | Credit |
| 04/01/2017 | Purchase HST on Purchases – ITC 15% TO Accounts Payable | 80,000 12,000 | 92,000 |
| 05/15/2017 | Cash TO Sales TO HST Payable on sales 15% | 69,000 | 60,000 9,000 |
| 05/15/2017 | Cost of goods sold TO Purchases | 50,000 | 50,000 |
| 06/15/2017 | HST Payable on sales 15% HST receivable TO HST on Purchases – ITC 15% | 9,000 3,000 | 12,000 |
