Xylex Ltd., a GST registrant, buys $ 6,200 worth of Supplies for their own use. The purchase is subject to 6% PST and 5% GST. What amount will be debited to the Supplies account as a result of this transaction?

Question

Quizplus · Accepted Answer

First, we need to calculate the PST: $6,200 x 6% = $372
Then, we need to calculate the GST: ($6,200 + $372) x 5% = $318.60
The total amount charged to Xylex Ltd. is $6,200 + $372 + $318.60 = $6,890.60
However, Xylex Ltd. is only able to claim the GST as an input tax credit, so the amount debited to the Supplies account would be $6,572 ($6,200 + $372).

Xylex Ltd, a GST Registrant, Buys $ 6,200 Worth of Supplies