Green Co. earned $20,000 in revenue and paid $15,000 in expenses (that do not include meals and entertainment). How much GST will Green Co. remit using the simplified ITC calculation? (Green Co. is in a province with 5% GST.)

Question

Quizplus · Accepted Answer

To calculate the GST remittance using the simplified ITC calculation, we need to follow these steps:

1. Calculate the total GST collected:
- Revenue x 5% = $20,000 x 5% = $1,000

2. Calculate the total ITCs (input tax credits) available:
- Expenses x 5% = $15,000 x 5% = $750

3. Calculate the net GST payable:
- GST collected ($1,000) - ITCs available ($750) = $250

Therefore, the answer is B) $238.

Green Co Earned $20,000 in Revenue and Paid $15,000 in Expenses