Question

Company paid electricity bill for February $ 220 ( including GST). GST is 10%. how to...

Company paid electricity bill for February $ 220 ( including GST). GST is 10%.

how to record this transaction ?

Business   Accounting   
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Answer #1

Solution:

There are two scenarios for recording this transaction. If GST is recoverable in nature then journal entry to record this transaction as under:

Journal Entries
Event Particulars Debit Credit
1 Electricity Expense Dr $200.00
GST Recoverable Dr $20.00
      To Cash $220.00
(Being electricity expense paid)

If GST is not recoverable in nature then journal entry to record this transaction is as under:

Journal Entries
Event Particulars Debit Credit
1 Electricity Expense Dr $220.00
      To Cash $220.00
(Being electricity expense paid)
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