Deck 11: Special Journals With Taxes

Question 1

The normal balance of Provincial Sales Tax Payable is a credit.

Answer 1

True

Question 2

Unlimited Materials sold goods for $1,800 plus 5% GST to a charge customer, terms n/30. Which entry is required to record this transaction (exclude the entry to Cost of Goods Sold and Inventory)?

A) Debit Accounts Receivable for $1,890; credit GST Payable $90 and credit Sales for $1,800
B) Debit Cash for $1,890; credit Sales for $1,890
C) Debit Accounts Receivable for $1,800; credit Sales for $1,800
D) Debit Accounts Receivable $1,890; credit Sales, $1,890

Answer 2

A

Question 3

Sold merchandise subject to HST at 13%, accepting cash. This will be recorded with

A) a credit to an expense account.
B) a credit to a liability account.
C) a credit to Capital.
D) None of these are correct.

Answer 3

B

Question 4

The ledger containing all the balance sheet and income statement accounts is the

A) general ledger.
B) accounts payable subsidiary ledger.
C) accounts receivable subsidiary ledger.
D) payroll ledger.

Question 5

HST collected by the seller increases the seller's total revenue.

Question 6

Determine the amount of cash collected at the time of making a cash sale of $7,450 worth of merchandise subject to 13% HST.

Question 7

The total of all cash and credit sales, net of HST, equals

A) sales returns and allowances.
B) net sales.
C) input tax credit.
D) gross sales.

Question 8

Flat Tire Company sold tires to a charge customer, including PST and GST. What entry is required to record this transaction?

A) Debit Cash, credit Sales, Debit Cost of Goods Sold, Credit Inventory
B) Debit Cash, credit Sales, credit GST Payable, credit PST Payable, Debit Cost of Goods Sold, Credit Inventory
C) Debit Accounts Receivable, credit Sales, Debit Cost of Goods Sold, Credit Inventory
D) Debit Accounts Receivable, credit Sales, credit GST Payable, credit PST Payable, Debit Cost of Goods Sold, Credit Inventory

Question 9

Sold merchandise subject to GST, accepting cash. This will be recorded with

A) a credit to an expense account.
B) a credit to a liability account.
C) a debit to an owner's equity account.
D) None of these are correct.

Question 10

Chan Company sold $500.00 of goods to Abdel Company on account, terms 2/10, n/30, and 5% PST. What was the amount of the invoice? (Show your computations.)

Question 11

Explain why the account Provincial Sales Tax Payable is credited when a sale is made subject to that tax?

Question 12

PST Payable is a

A) revenue account with a credit balance.
B) cost of goods sold account with a debit balance.
C) contra revenue account with a debit balance.
D) liability account.

Question 13

Provincial Sales Tax Payable represents an asset on the books of the seller.

Question 14

Determine the amount of cash collected at the time of making a sale of $1,200 worth of merchandise subject to a 6% provincial sales tax plus 5% GST.

Question 15

PST Payable is a Liability Account.

Question 16

The normal balance of the HST Collected is

A) a debit.
B) a credit.
C) zero.
D) positive.

Question 17

The liability account used to record HST owed is

A) Sales Tax Expense.
B) Prepaid Taxes.
C) HST Payable.
D) Sales.

Question 18

Sold Merchandise for Cash subject to a provincial sales tax. This will be recorded with

A) a credit to an expense account.
B) a debit to a liability account.
C) a credit to Capital.
D) None of these are correct.

Question 19

Provincial Sales Tax Payable is a

A) liability account with a debit balance.
B) liability account with a credit balance.
C) contra-asset account with a debit balance.
D) contra-asset account with a credit balance.

Question 20

GST Collected is an owner's equity account with a debit balance.

Question 21

Molly's Craft Shop sold goods for $450 plus PST at 5% to a charge customer. The customer returned $100 worth of goods for credit. Terms of the sale were 2/10, n/30. If the customer pays the amount within the discount period, what amount should the customer pay?

A) $360.50
B) $345.00
C) $350.00
D) $372.50

Question 22

A credit memorandum decreases which account on the seller's books?

A) Accounts Payable
B) Purchases Returns and Allowances
C) Sales Returns and Allowances
D) Accounts Receivable

Question 23

Singh Company received payment in full within the credit period for goods sold for $400 plus 13% HST. Terms of the sale were n/30. Which entry records this transaction?

A) Debit Accounts Receivable $420, credit Sales, $420
B) Debit Cash, $452, credit Sales, $452
C) Debit Cash, $400, credit Accounts Receivable, $400
D) Debit Cash, $452, credit Accounts Receivable, $452

Question 24

The collection of an invoice for $5,000 plus HST of 13% within the 2/10 n/30 discount period was recorded using a 3% discount rather than a 2% discount in both the controlling and subsidiary accounts. This error will cause

A) the net income for the period to be understated.
B) the net income for the period to be overstated.
C) the control account to not agree with the subsidiary ledger.
D) the assets to be overstated.

Question 25

Customers can take cash discounts on GST and PST when terms are 2/10, n/30.

Question 26

Use the following information to answer the questions below:
Sales $73,400
HST Collected 9,542
Sales Discount 1,500
Sales Returns and Allowances 900
Delivery Expense 700
The Net Sales are ________.

Question 27

Sue's Jewelry sold 25 necklaces for $25 each to a credit customer. The cost of the necklaces to Sue's Jewelry was $15 plus 13% HST. The invoice included HST at 13% and payment terms of 2/10, n/30. Five necklaces were returned prior to payment. The entry to record the return would include

A) a debit to Sales Returns and Allowances for $141.25.
B) a debit to Sales Returns and Allowances for $125.00.
C) a credit to Sales Tax Payable for $16.25.
D) a debit to Accounts Receivable for $141.25.

Question 28

The contra-revenue accounts include

A) HST Payable.
B) Sales Returns and Allowances.
C) Sales Discount.
D) Both B and C are correct.

Question 29

Sue's Jewelry sold 25 necklaces for $25 each to a credit customer. The cost of the necklaces to Sue's Jewelry was $15 plus 5% GST. The invoice included a 6% provincial sales tax, 5% GST, and payment terms of 2/10, n/30. Five necklaces were returned prior to payment. The entry to record the original sale would include

A) a debit to Accounts Receivable for $693.75.
B) a debit to Accounts Receivable for $625.
C) a credit to Sales for $693.75.
D) a debit to Sales for $625.

Question 30

Singh Company received payment in full within the discount period for goods sold for $400 plus 13% HST. Terms of the sale were 2/10, n/30. Which entry records this transaction?

A) Debit Cash, $442.96, debit Sales Discounts $9.04, credit Accounts Receivable, $452
B) Debit Cash, $444, debit Sales Discounts $8, credit Accounts Receivable, $452
C) Debit Cash, $444, credit Accounts Receivable, $444
D) Debit Cash, $452, credit Accounts Receivable, $452

Question 31

Sales discounts are always given on taxes such as PST and HST.

Question 32

Cynthia's Crystals sold $1,000 worth of crystal plus 5% GST and 8% PST to a charge customer with terms 2/10, n/30. The invoice was paid within terms. The entry to record receipt of payment is

A) Debit cash $1,130, credit Accounts Receivable $1,130.
B) Debit cash $1,297.60, debit Cash discounts $22.40, credit Accounts Receivable $1,120.
C) Debit Cash $1,110, debit Cash Discounts $20, credit Accounts Receivable $1,130.
D) Debit Cash $1,080, debit Cash Discounts $20, credit Accounts Receivable $1,000, credit GST Payable $50, credit PST Payable $80.

Question 33

Net Sales equals Gross Sales plus HST, less Sales Returns & Allowances, less Sales Discounts.

Question 34

Calculate gross sales:
Net sales = $75,000
HST charged = $14,300
Sales returns and allowances - $15,000
Sales discounts - $20,000
Accounts receivable - $12,000

Question 35

Sales discounts are NOT taken on which of the following?

A) HST added
B) Freight
C) Merchandise returned
D) Sales Discounts are not taken on any of the above.

Question 36

Sue's Jewelry sold 25 necklaces for $25 each to a credit customer. The cost of the necklaces to Sue's Jewelry was $15. The invoice included a 5% provincial sales tax and payment terms of 2/10, n/30. Five necklaces were returned prior to payment. The entry to record the payment if it was received during the discount period would include

A) a credit to Accounts Receivable for $643.13.
B) a credit to Accounts Receivable for $656.25.
C) a credit to Accounts Receivable for $525.00.
D) a credit to Accounts Receivable for $515.00.

Question 37

Sue's Jewelry sold 25 necklaces for $25 each to a credit customer. The cost of the necklaces to Sue's Jewelry was $15 plus 5% GST. The invoice included a 6% provincial sales tax, 5% GST, and payment terms of 2/10, n/30. Five necklaces were returned prior to payment. The entry to record the original sale would include

A) a credit to Inventory for $75.
B) a credit to Inventory for $84.75.
C) a debit to Sales Returns and Allowances for $75.
D) a debit to Sales Returns and Allowances for 84.75.

Question 38

Secret Trails received payment in full within the credit period for boarding for $800 plus 13% HST. Terms of the sale were 2/10, n/30. Which entry is required to record this transaction?

A) Debit Accounts Receivable, $800; credit Sales, $800
B) Debit Cash, $888; credit Accounts Receivable, $888
C) Debit Cash, $784; credit Sales, $784
D) Debit Cash, $904; credit Sales, $904

Question 39

Sue's Jewelry sold 25 necklaces for $25 each to a credit customer. The cost of the necklaces to Sue's Jewelry was $15. The invoice included a 5% provincial sales tax and payment terms of 2/10, n/30. Five necklaces were returned prior to payment. The entry to record the payment if it was received after the discount period would include

A) a credit to Cash for $555.00.
B) a debit to Cash for $500.00.
C) a credit to Accounts Receivable for $525.00.
D) a credit to Accounts Receivable for $550.00.

Question 40

Sales discounts are usually allowed only on

A) credit sales plus GST/HST.
B) freight.
C) credit sales to customers.
D) credit sales plus PST.

Question 41

Morris Jewelry Store sold R. Alexander a diamond engagement ring for $2,000 plus 5% PST and 5% GST. The ring cost Morris Jewelry Store $925. Terms of the sale are n/30. Date of the sale was April 12, date of the payment was May 12. On April 15, R. Alexander received an allowance for a flaw in the ring, $500.
Required: Determine the amount R. Alexander should pay Morris Jewelry Store, May 12. Show your computations.

Question 42

Zinck Furniture Company of Ontario sold K. Daniels a bedroom set for $2,500 plus 8% PST and 5% GST. The furniture originally cost $1,700. Terms of the sale are 1/10, n/30. The date of the sale was May 23 and the date of the payment was June 1.
Required: Determine the amount K. Daniels should pay Zinck Furniture on June 1. Show your computations.

Question 43

Why isn't it a normal practice to give discounts on taxes?

Question 44

Individual invoice amounts, including HST, are recorded during the month to the accounts payable ledger.

Question 45

Determine the amount of cash collected:
Gross sales = $250,000
HST collected = $27,300
Sales Discounts = $6,000
Sales Returns and Allowances = $40,000

Question 46

Entries to customers' accounts for sales made with 13% HST are recorded in the

A) accounts receivable subsidiary ledger.
B) accounts payable subsidiary ledger.
C) fixed asset subsidiary ledger.
D) cash subsidiary ledger.

Question 47

December 10 Payment from Cathy Norton received.
________ ________ ________
________ ________ ________
________ ________ ________

Question 48

The accounts payable subsidiary ledger

A) lists accounts alphabetically.
B) lists accounts with which the company does business on a regular basis.
C) has a controlling account in the general ledger.
D) All of the above are correct.

Question 49

December 2 Sold merchandise priced at $85 to Cathy Norton on account. The cost of goods was $60.
________ ________ ________
________ ________ ________
________ ________ ________
________ ________ ________
________ ________ ________

Question 50

Determine the amount of cash collected on a credit sale in the amount of $4,300, subject to 13% HST when $500 worth of merchandise has already been returned for credit, and the invoice was paid within the discount period which allowed a 2% discount.

Question 51

What should always be done after creating the schedule of accounts receivable?

Question 52

December 4 Sold merchandise priced at $105 to a cash customer. The cost of goods was $79.
________ ________ ________
________ ________ ________
________ ________ ________
________ ________ ________
________ ________ ________

Question 53

All controlling accounts must have a

A) revenue ledger.
B) general ledger.
C) subsidiary ledger.
D) journal.

Question 54

Which of the following statements about subsidiary ledgers is most accurate?

A) The subsidiary ledger accounts will show details of any HST billed.
B) The accounts receivable subsidiary ledger is a book of accounts that provides supporting detail for Accounts Receivable.
C) The subsidiary ledger accounts will total the amount in the Sales account.
D) All of these answers are correct.

Question 55

Joe's Garage performed repairs to a customer's car. The repairs came to $1,600 plus 13% HST and the parts and labour cost Joe's Garage $800. If terms are 2/10, n/30, how much must the customer pay if paying in 9 days? (Show your computations.)

Question 56

A characteristic of a schedule of accounts receivable is that

A) it contains a list of vendor names with balances.
B) the total is equal to the accounts receivable control account at the end of the month.
C) it is prepared at the end of the month.
D) Both B and C are correct.

Question 57

December 16 cash customer returned $35 worth of merchandise. The cost of goods was $27.
________ ________ ________
________ ________ ________
________ ________ ________
________ ________ ________
________ ________ ________

Question 58

On March 30, Francine's Bakery purchased $1,000, plus 13% HST, of merchandise on account from Smithers Company. The goods were shipped F.O.B. shipping point. The freight charge of $80 (includes HST) was paid by Williams Company and added to the invoice. The amount to record in the Accounts Payable account is

A) $1,000.
B) $1,300.
C) $1,210.
D) $1,130.

Question 59

A list showing the ending balances owed to individual suppliers includes any HST paid.

Question 60

Martha's Rug Company has the following transaction totals for the month. Use this information to answer the questions below.
Sales Returns and Allowances $1,300
Sales Discounts 1,100
Inventory purchased 15,000
HST Paid 720
Sales 42,000
HST Collected 2,415
Discounts on purchases 1,020
Purchases Returns and Allowances 1,400
Cost of Freight-In 920
Beginning Inventory 7,650
Cost of Goods Sold 10,120
Based on the above, Ending Inventory is ________.

Question 61

Determine the amount of credit to be earned on a full return of merchandise purchased with an invoice price of $4,000 plus HST at 13% and credit terms of 2/10, n/30.

Question 62

A debit memorandum decreases which account on the buyer's books?

A) Accounts Payable
B) Inventory
C) Sales Returns and Allowances
D) Accounts Receivable

Question 63

What type of account is HST Payable?

A) Liability
B) Contra asset
C) Contra cost/expense
D) Contra revenue

Question 64

The credit that a company receives for the GST/HST it pays is called

A) Output Tax Credit.
B) Input Tax Credit.
C) Business Tax Credit.
D) Payroll Tax Credit.

Question 65

The normal balance for Inventory is

A) a debit.
B) a credit.
C) zero.
D) It does not have a normal balance.

Question 66

When a debit memorandum for returned merchandise for Moore Co. is recorded, the entry is

A) debit Accounts Payable, credit Purchases.
B) debit Purchases Returns and Allowances, credit Accounts Payable in the general ledger.
C) debit Accounts Payable Moore Co. in the accounts payable subsidiary ledger, debit Accounts Payable in the general ledger, credit Purchases Returns and Allowances.
D) debit Purchases, credit Accounts Payable.

Question 67

The basic concept of the quick method of accounting for GST/HST is best described as follows:

A) The quick method allows a small company to pay as little tax as possible.
B) Only small companies with total sales of less then $150,000 can use the quick method.
C) A smaller company will remit about as much tax as they would if detailed records were maintained.
D) A small company with large capital purchases should always avoid using the quick method.

Question 68

An entry for a purchase return will include

A) a debit to Inventory.
B) a credit to Inventory.
C) a credit to Sales Returns and Allowances.
D) a debit to Sales Returns and Allowances.

Question 69

J. Frumm Co. has the following transaction totals for the month. Use this information to answer the questions below.
Cost of Freight-In $150
Discounts received on purchases 750
Value of Inventory Returns and Allowances 900
Purchases of Inventory 7,000
HST Paid 1,620
Beginning Inventory 1,200
Cost of Goods Sold 1,350
Based on the above, Ending Inventory is ________.

Question 70

If Rosie sends back damaged merchandise for credit, to Rosie it would be a

A) Debit to Sales Return and Allowance.
B) Credit to Sales Discount.
C) Credit to Inventory.
D) Debit to Inventory.

Question 71

Heidi's Accessories bought 40 necklaces for $10 each on account. The invoice included 5% GST and payment terms of 2/10, n/30. In addition, 5 necklaces were returned prior to payment. The entry to record the return would include

A) a debit to Accounts Payable for $50.00.
B) a debit to Accounts Payable for $52.50.
C) a debit to Inventory for $50.00.
D) a debit to Inventory for $52.50.

Question 72

Purchases discounts are usually not taken on PST or HST.

Question 73

Lee's Golf Shop on May 31 has the following transaction totals: Sales $11,000
HST Collected 1,600
Sales Returns and Allowances 1,000
Opening Inventory 8,000
HST Paid 1,090
Cost of Freight In 500
Purchases during the period 1,000
Purchases discounts received 600
Cost of Goods Sold 2,500
Based on the above, ending Inventory for the period is

A) $12,600.
B) $6,400.
C) $6,910.
D) $8,900.

Question 74

What type of account is Prepaid HST?

A) Liability
B) Contra asset
C) Contra liability
D) Contra revenue

Question 75

Trade discounts are not subject to HST.

Question 76

Bruce's Jewelry bought 50 rings for $10 each on account. The invoice included 13% HST and payment terms of 2/10, n/30. In addition, five rings were later returned prior to payment. The entry to record the purchase would include

A) a debit to Accounts Payable for $500.00.
B) a debit to Accounts Payable for $565.00.
C) a debit to Inventory for $500.00.
D) a debit to Inventory for $565.00.

Question 77

Following is the Schedule of Accounts Payable for London Warehouse. Considering GST of 5% is charged on each invoice, what is a breakdown of Inventory and GST Paid for each creditor?
Schedule of Accounts Payable
J. Bentley $1,575.00
P. Anders 2,429.70
N. Cassels 5,008.50
Total $9,013.20

Question 78

Fiona's Bistro on May 31 has the following transaction totals for the month: Sales $78,000
HST Collected 2,410
Sales Returns and Allowances 1,500
Accounts Payable 9,400
Purchases made during the period 42,000
HST Paid 875
Inventory Returns and Allowances 2,200
Discounts received on purchases 1,850
Cost of Goods Sold 5,000
Net change in Inventory for the period is

A) $36,125.
B) $32,950.
C) $46,400.
D) $37,875.

Question 79

On March 30, Francine's Bakery purchased $1,000, plus 13% HST, of merchandise on account from Smithers Company. The goods were shipped F.O.B. shipping point. The freight charge of $80 (includes HST) was paid by Williams Company and added to the invoice. The amount to record in the Inventory account is

A) $1,000.
B) $1,130.
C) $1,080.
D) $1,210.

Question 80

Determine the amount to be paid within the discount period for purchase with an invoice price of $3,000 plus GST at 5% and credit terms of 2/10, n/30 when $500 (before GST) has already been returned for credit.