Reference no: EM132676917
Questions -
Q1. Blue Spruce Inc. operates in a province, where it is subject to GST of 5%. In August, Blue Spruce purchased $31,800 of merchandise inventory, and had sales of $46,900 on account. Blue Spruce uses a periodic inventory system.
a. Prepare the summary entry to record the purchases for August.
b. Prepare the summary entry to record sales for August.
c. Prepare the subsequent entry to record the payment of any GST owing to the Receiver General for Canada.
Q2. Bramble Ltd., a private company following ASPE, is a merchant and operates in the province of Ontario, where the HST rate is 13%. Bramble uses a perpetual inventory system. Transactions for the business for the month of March and April are as follows:
Mar. 1 Paid March rent to the landlord for the rental of a warehouse. The lease calls for monthly payments of $4,700 plus 13% HST.
Mar. 3 Sold merchandise on account and shipped merchandise to Marcus Ltd. for $15,800, terms n/30, f.o.b. shipping point. This merchandise cost Bramble $13,100.
Mar. 5 Granted Marcus a sales allowance of $800 (exclusive of taxes) for defective merchandise purchased on March 3. No merchandise was returned.
Mar. 7 Purchased merchandise for resale on account from Tinney Ltd. at a list price of $2,700, plus applicable tax.
Mar. 12 Purchased a desk for the shipping clerk, and paid by cash. The price of the desk was $800 before applicable tax.
Apr. 15 Paid the monthly remittance of HST to the Receiver General for Canada.
Apr. 30 Paid the monthly PST remittance to the Treasurer of the province (where applicable).
a. Prepare the journal entries to record these transactions on the books of Bramble Ltd.
b. Assume instead that Bramble operates in the province of Alberta, where PST is not applicable. GST is charged at the rate of 5%. Prepare the journal entries to record these transactions on the books of Bramble.
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