Reference no: EM132954210

Fantastic Fashions has just completed its first quarter of operations. Assume that Fantastic Fashions adjusts its book quarterly. Below are transactions that have not yet been recorded.

Jan 1 Made cash sales of $75,000 before tax. HST is collected on all sales at a rate of 13%.
Jan 15 Signed a six month note for $12,000 to extend amounts owing on account to Trendy Taste Inc. Interest is 6% annually and due at maturity.
Mar 1 Received the annual property tax bill for $7,500 payable on Apr 30.
Apr 1 Paid gross salaries of $10,000; of this amount $495 is CPP, $178 is EI and $3,465 is for income taxes.
Apr 30 Paid the property taxes bill in full.

Problem 1: The journal entry to record salaries on Apr 1 is

Option 1: Salaries expense 10,000
CPP Payable 495
EI Payable 178
Income Tax Payable 3,465
Salaries payable 5,862

Option 2: Salaries expense 10,000
CPP Payable 495
EI Payable 178
Income Tax Payable 3,465
Cash 5,862

Option 3: Employee benefit expense 10,000
CPP Payable 495
EI Payable 178
Income Tax Payable 3,465
Cash 5,862

Option 4: Salaries expense 14,138
CPP Payable 495
EI Payable 178
Income Tax Payable 3,465
Cash 10,000

Option 5: None of the above