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Whiteboard Review!

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.

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Whiteboard Review!

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  1. Whiteboard Review! Chapter 6

  2. 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.

  3. October 1 Sales Invoice • No. 201 to Jane White, $550 plus tax. Answer: A/R – Jane White 621.5 Sales 550 HST Payable 71.5

  4. October 5 Cheque Copy • No.50 to Paint Perfection for the cash payment of painting equipment. Paid $350 plus tax. Answer: Cash 395.5 HST Recoverable 45.5 Painting Equipment 350

  5. October 8 Purchase Invoice • Painting Press Magazine, No. 1869 for a months subscription. $16.99 plus tax Answer: Subscription Expense 16.99 HST Recoverable 2.21 A/P – Painting Press 19.20

  6. October 12 Cash Receipt • From Velma Red on account. $650 Answer: Bank 650 A/R – Velma Red 650

  7. October 15 Bank Debit Advice • $10 service charge Answer: Bank charges expense 10 Bank 10

  8. 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 • How much should John record each of the items for on his balance sheet? • What GAAP principle applies? • Record the Journal Entry

  9. October 18 Answer • Ladder $160, Scaffolding $320, Paint brushes $280, Rollers $160, Small tools $80 = Total = $1000 • Cost Principle • Equipment 480 Painting Supplies 440 Small Tools 80 Bank 1000

  10. 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 Payable 300 Cash 200 HST Recoverable 500

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