MGAB01H3 Chapter : sales tax

65 views1 pages

ochretortoise616

31 Oct 2010

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

azizs2026mac and 38565 others unlocked

MGAB01H3 Full Course Notes

Verified Note

16 documents

Document Summary

The gst is a 7% personal consumption tax that is collected on most goods and services provided in canada. There are gst exemptions that does not require to be taxed. Pst is a single-stage tax collected from final consumers on goods and services. Gst and pst are excluded from the sales account as it is only collected to be remitted. The general entry would be: cash/a. r debited, sales credited, gst/pst payable. If merchandise is returned, the general entry would be: sales returns and allowances debited, gst/pst payable debited, and cash/a. r credited. Businesses pay gst on their purchases, but are able to recover the gst. Consequently, when merchandise is purchased, the gst paid by a business is not part of the inventory cost. The gst paid on purchases is debited to an account called gst recoverable and is called an input tax credit. This input tax credit is used to offset against the gst payable.

Related Questions

Use the following information toanswer the next 11 questions. SELECT ALL ANSWERS THATAPPLY.

On May I. Sam Company sold $5,000of inventory to Bob Company. The sale was made on account and Samgranted Bob credit terms of 2/10. n/30. The inventory cost SamCompany $3,000. On May 3, Bob returned $1,000 of the inventory toSam. (The inventory returned by Bob cost Sam $600.) On May 9, Bobpaid Sam in full for the amount due.

1. What account will Bob debit on May I if the periodicinventory system is used?

A) Accounts Payable

B) Cost of Goods Sold

c) Merchandise Inventory

D) Purchases

E) None of the above

2. What account will Bob debit on May I if the perpetualinventory system is used?

A) Accounts Payable

B) Cost of Goods Sold

C) Merchandise Inventory

D) Purchases

E) None of the above

3. What account will Sam debit on May l if the periodicinventory system, is used?

A) Accounts Payable

B) Cost of Goods Sold

C) Merchandise Inventory

D) Purchases

E) None of the above

4. What account will Sam debit on May I if the perpetualinventory system is used?

A) Accounts Payable

B) Cost of Goods Sold

C) Merchandise Inventory

D) Purchases

E) None of the above

5. What journal entry will Bob record on May 3 if the periodicinventory system is used?

A) debit Accounts Payable, $1,000; credit Merchandise Inventory,$1,000.

B) debit Accounts Payable, $1,000; credit Purchases, $1,000.

C) debit Accounts Payable, $1,000; credit Purchase Discounts,$1,000.

D) debit Accounts Payable, $1,000; credit Purchase Returns andAllowances, $1,000.

E) debit Merchandise Inventory; $600; credit Cost of Goods Sold,$600.

6. what journal entry will Bob record on May 3 if the perpetualinventory system is used?

A) debit Accounts Payable, $1,000; credit Merchandise Inventory,$1,000.

B) debit Accounts Payable, $1,000; credit Purchases, $1,000.

C) debit Accounts Payable, $1,000; credit Purchase Discounts,$1,000.

D) debit Accounts Payable, $1,000; credit Purchase returns andAllowances, $1,000.

E) debit Merchandise Inventory; $600; credit Cost of Goods Sold,$600.

7. what journal entry will Sam record on May 3 if the periodicinventory system is used?

A) debit Merchandise Inventory, $600; credit Cost of Goods Sold,$600.

B) debit Sales, $1,000; credit Accounts Receivable, $1,000.

C) debit Sales, $1,000; credit Cash, $1,000.

D) debit Sales Returns and Allowances, $1,000; credit AccountsReceivable, $1,000.

E) debit Sales Returns and Allowances, $1,000; credit Cash,$1,000.

Choose the best definition for each item.

A cash (also called sales) discount

Answer 1
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

The gross profit percentage

Answer 2
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

A perpetual inventory system

Answer 3
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

Net sales

Answer 4
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

When a sale of merchandise is made

Answer 5
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

The operating cycle of a merchadiser

Answer 6
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

Goods purchased FOB shipping point

Answer 7
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

plumbuffalo108

Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2018 with an allowance for sales returns of $420,000. During 2018, Halifax sold merchandise on account for $12,700,000. This merchandise cost Halifax $7,620,000 (60% of selling prices). Also during the year, customers returned $619,000 in sales for credit. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year.

Required:

1. Prepare an entry to record actual merchandise returns as they occur (not adjusting the allowance for sales returns), and then record a year-end entry to adjust the allowance for sales returns to its appropriate balance.
2. What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?

REQUIRED 1. Prepare an entry to record actual merchandise returns as they occur (not adjusting the allowance for sales returns), and then record a year-end entry to adjust the allowance for sales returns to its appropriate balance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

REQUIRED 2:What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?

MGAB01H3 Chapter : sales tax

MGAB01H3 Full Course Notes

Document Summary

Get access

Related Documents

MGAB01H3 Lecture Notes - Lecture 16: Canadian Securities Administrators, Chief Financial Officer, Internal Control

MGAB01H3 Chapter 8: Chapter 8 Notes

MGAB01H3 Chapter 5.2: Chapter 5.2

Related Questions