Whiteboard Review! Chapter 6

Pete's Painting Service! Pete runs a small Painting Service. He normally paints people’s homes, when they are doing renovations. He is completely confused when it comes to HST – he doesn’t know how to journalize his transactions. Help Pete journalize his October transactios.

October 1 Sales Invoice No. 201 to Jane White, $550 plus tax. Answer: A/R – Jane White621.5 Sales550 HST Payable71.5

October 5 Cheque Copy No.50 to Paint Perfection for the cash payment of painting equipment. Paid $350 plus tax. Answer: Cash395.5 HST Recoverable45.5 Painting Equipment350

October 8 Purchase Invoice Painting Press Magazine, No for a months subscription. $16.99 plus tax Answer: Subscription Expense16.99 HST Recoverable2.21 A/P – Painting Press19.20

October 12 Cash Receipt From Velma Red on account. $650 Answer: Bank650 A/R – Velma Red650

October 15 Bank Debit Advice $10 service charge Answer: Bank charges expense10 Bank10

October 18 John went on KIJIJI and purchased a crate of painting supplies for $1,000. John bought the items from Amy, Amy originally had paid the following amounts for the items: Ladder $200, Scaffolding $400, Paint brushes $350, Rollers $200, Small tools $100 1.How much should John record each of the items for on his balance sheet? 2.What GAAP principle applies? 3.Record the Journal Entry

October 18 Answer 1.Ladder $160, Scaffolding $320, Paint brushes $280, Rollers $160, Small tools $80 = Total = $ Cost Principle 3.Equipment480 Painting Supplies440 Small Tools80 Bank1000

October 31 John determines that at the end of the month, his HST recoverable account has a balance of $500, and his HST payable account has a balance of $300. Does he remit his HST or receive a refund? Record the journal entry Answer: HST Payable300 Cash200 HST Recoverable500