Question

1]

Simon sold goods to Lawrence for $2200 including GST. Lawrence paid his account within the discount period and received a settlement discount of 2%. Using the gross method, the correct entry to be recorded in Simon’s books for the payment from Lawrence is:

a] DR Bank $2156; DR Discount allowed $44; CR Accounts receivable $2200.

b] DR Bank $2160; DR Discount allowed $40; CR Accounts receivable $2200. DR Bank $2156,

c] DR Discount allowed $44; DR GST payable $4; CR Accounts receivable $2204.

d] DR Bank $2156; DR Discount allowed $40; DR GST payable $4; CR Accounts receivable $2200.

2]

Under the perpetual inventory system, what is the correct entry for the credit purchase of 10 electric keyboards at $100 per keyboard plus GST of 10%?

a	DR Inventory $1100; CR Accounts payable $1000; CR GST payable $100.

b	DR Inventory $1000; DR GST receivable $100; CR Accounts payable $1100.

c	DR Accounts payable $1100; CR Inventory $1000; CR GST payable $100.

d	DR Inventory $1100; CR Accounts payable $1100.

Answer 1

Journal entry will be:

1.

Bank A/c            Dr. $2,156

Discount Allowed    Dr. $44

            To, Account Receivable        $2,200

2.

Inventory A/c                          Dr. $1,000

GST Receivable                      Dr. $100

        To, Accounts Payble                         $1,100