A business sold some inventory on credit for $5,000 before taxes. The sale is subject to 5% goods and services tax (GST) and 7% provincial sales tax (PST). The business uses a perpetual inventory system. What is the amount that will be recorded in the GST payable account as a result of this sale?

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The GST payable on a $5,000 sale at 5% is $250 ($5,000 * 0.05). This amount is a liability for the business until it is remitted to the government, so it is recorded as a credit in the GST payable account.

A Business Sold Some Inventory on Credit for $5,000 Before