Question

Riverbed Ltd. is a merchant and operates in the province of Ontario, where the HST rate is 13%. Riverbed 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 $5,020 plus 13% HST.
	3		Sold merchandise on account and shipped merchandise to Marcus Ltd. for $17,420, terms n/30, f.o.b. shipping point. This merchandise cost Riverbed $14,300.
	5		Granted Marcus a sales allowance of $730 (exclusive of taxes) for defective merchandise purchased on March 3. No merchandise was returned.
	7		Purchased merchandise for resale on account from Tinney Ltd. at a list price of $3,300, plus applicable tax.
	12		Purchased a desk for the shipping clerk, and paid by cash. The price of the desk was $680 before applicable tax.
Apr.	15		Paid the monthly remittance of HST to the Receiver General.
			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 Riverbed Ltd. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) b) Assume instead that Riverbed 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 Riverbed. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) c) Assume instead that Riverbed operates in a province where 9% PST is also charged on the 5% GST. Prepare the journal entries to record these transactions on the books of Riverbed. Rental payments and inventory purchased for resale are PST-exempt. (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

1-Mar	Rent Expense	5,020
	HST Recoverable ($5,020 X 13%)	653
	Cash		5,673
3	Accounts Receivable—Marcus	19,685
	Sales		17,420
	HST Payable ($17420 X 13%)		2,265
	Cost of Goods Sold	14,300
	Merchandise Inventory		14,300
5	Sales Returns and Allowances	730
	HST Payable ($730 X 13%)	95
	Accounts Receivable—Marcus		825
7	Merchandise Inventory	3,300
	HST Recoverable ($3300 X 13%)	429
	Accounts Payable—Tinney		3,729
12	Furniture	680
	HST Recoverable ($680 X 13%)	88
	Cash		768
April 15	HST Payable ($2,265 – $94.9)	2,170
	HST Payable		1,000
	HST Recoverable		1,170
	($652.6 + $429 + $88.4)
(b)  Province of Alberta
1-Mar	Rent Expense	5,020
	GST Recoverable ($5,020 X 5%)	251
	Cash		5,271
3	Accounts Receivable—Marcus	18,291
	Sales		17,420
	GST Payable ($17420 X 5%)		871
	Cost of Goods Sold	14,300
	Merchandise Inventory		14,300
5	Sales Returns and Allowances	730
	GST Payable ($730 X 5%)	37
	Accounts Receivable—Marcus		767
7	Merchandise Inventory	3,300
	GST Recoverable ($3300 X 5%)	165
	Accounts Payable—Tinney		3,465
12	Furniture	680
	GST Recoverable ($680 X 5%)	34
	Cash		714
April 15	GST Payable ($871 – $36.5)	835
	GST Payable		385
	GST Recoverable		450
	($251 + $165 + $34)
(c)
1-Mar	Rent Expense	5,020
	GST Recoverable ($5,020 X 5%)	251
	Cash		5,271
3	Accounts Receivable—Marcus	20,120
	Sales		17,420
	GST Payable ($17420 X 5%)		871
	PST Payable		1,829
	[($17420 X 1.05) X 10%]
	Cost of Goods Sold	14,300
	Merchandise Inventory		14,300
5	Sales Returns and Allowances	730
	GST Payable ($730 X 5%)	37
	PST Payable [($730 X 1.05) X 10%]	77
	Accounts Receivab.—Marcus		843
7	Merchandise Inventory	3,300
	GST Recoverable ($3300 X 5%)	165
	Accounts Payable—Tinney		3,465
12	Furniture ($680 + $71.4*)	751
	GST Recoverable ($680 X 5%)	34
	Cash		717
	* ($680 X 1.05) X 10% = $71.4
April 15	GST Payable ($871 – $36.5)	835
	GST Recoverable		385
	GST Recoverable		450
	($251 + $165 + $34)
30-Jan	PST Payable ($1829 – $76.65)	1,752
	PST Recoverable		1,752