Reference no: EM132606002

Gibco Limited has an October 31 year end. On October 1, 2020 Gibco had the following current liabilities listed on its books:

Bank credit line ................................ $23,250

Accounts payable ............................. 100,500

CPP, EI and income tax payable ....... 9,620

Unearned revenues ......................... 12,000

• During October 2020 Gibco engaged in the following transactions: Oct 1 Paid $20,000 on the credit line with their bank Oct 5 Sold goods worth $30,000 on which they had previously received a $12,000 deposit. The balance is due in 30 days. Oct 12 Bought $20,000 of inventory on credit, terms of 30 days.

Oct 15 Paid amounts due the Government of Canada for the payroll amounts outstanding from September 30. Oct 20 Paid $87,000 owing to a supplier. Oct 21 Received $5,000 from a client for work that will be performed in January 2021. Oct 21 Sold $56,000 of goods half for cash, half on credit. Oct 30 Paid the monthly payroll amounts to employees. The gross payroll was $16,200.

Amounts withheld from the employees' cheques were as follows:

Canada pension plan premiums (CPP) $802

Employment insurance premiums (EI) $259

Income tax $2,800 At this time, the company also recorded their liability for amounts due to the government for CPP and EI. Oct 31 Declared $5,000 of dividends payable next year.

Instructions

Question a) Prepare all of the journal entries required as a result of the above transactions.

Question b) Prepare the current liabilities section of the statement of balance sheet at October 31, 2020.