You are here

Home » Introduction to Financial Accounting (Second Edition) » Debt Financing: Current and Non-current Liabilities » Assignment Materials » Comprehension Problems

CP 9-4

14 August, 2015 - 17:32
Available under Creative Commons-NonCommercial-ShareAlike 4.0 International License.

Smith Corporation purchases merchandize on account from a supplier on June 30, 2016 for $4,000 plus GST (5%). On July 5, merchandize is sold for $5,000 plus GST to Customer A on account. Assume that the perpetual inventory method is used.

Required:

  1. Prepare the journal entry to record the $4,000 purchase from the supplier.
  2. Prepare the journal entry to record the sale to Customer A.
  3. Prepare the journal entry to record payment of GST on these two transactions to the Government of Canada on July 31.
  4. How much GST expense will Smith Corporation report on its income statement for these two transactions?

Descriptions and general ledger account numbers are not necessary for journal entries.

  • 1136 reads