Chapter 6 Test Review Terms: Bank credit memo (advice) Is an official notice from a business or a bank that documents a refund Cash receipts daily summary A list of cash received by a business Clearing an account balance An amount of money that can be withdrawn

Question

Chapter 6 Test Review

Terms:

Bank credit memo (advice)	Is an official notice from a business or a bank that documents a refund
Cash receipts daily summary	A list of cash received by a business
Clearing an account balance	An amount of money that can be withdrawn. Until funds are considered to be cleared.
Harmonized Sales Tax (HST)	It is a combination between provincial and federal tax.
Opening entry	First entry made when a new business is starting
Purchase invoice	Purchase on account made by the business
Sales invoice	Sale on account to a customer.
Credit	The right side of an account
Bank debit memo (advice)	A bank document informing the business of decrease made in the business’s bank account.
Cash sales slip	A business dorm showing the details of a transaction in which goods or services are sold to a customer for cash
Compound entry	A transaction that affects more than two accounts
Journal	A journal is a book in which the accounting entries for all transactions are first recorded
Point of sale (POS) terminal	Is an electronic device cash register used to process payment at retail locations.
Remittance	A payment being made to a creditor or the government
Sales tax	An additional charge added to sales
Contra account	Account in a ledger that reduces the value of a related account. Eg. HST Recoverable is contra (a subtraction from) to HST Payable
Book of original entry	Refers to the accounting journals in which business transactions are initially recorded – General Journal.
Cheque copy	Is a document supporting the accounting entry for a payment by cheque
Goods and Services Tax (GST)	Tax that’s added to most goods and services sold for domestic consumption. Revenue for federal government
Journal entry	A record of accounts affected by a transaction
Provincial Sales Tax (PST)	A tax charged on sales that needs to be collected from customers and sent to the provincial government
Remittance advice	The tear-off section of a cheque explaining what the cheque is for
Debit	The left side of an account
Source documents	Evidence that a transactions has occurred—e.g. cash sales slip, sales invoice, purchase invoice, cheque copy

Name the type of transaction for each source document:

Cash sales slip
Purchase Invoice
Cash receipts daily summary
Bank credit memo
Sales Invoice
Cheque Copy
Bank debit memo

Decide if the company has to send the government a cheque (remittance) or if the government will send them a cheque (refund) and calculate the amount.

End of	HST Recoverable	HST Payable	Amount of Remittance	Refund Claimed
Period	HST Recoverable	HST Payable	Amount of Remittance	Refund Claimed
Oct. 31	1025.96	988.36
31-May	5514.23	9633.54
Nov. 30	215.63	664.25

Dean Hemiston paid $492, including 13% HST, for some equipment.
A.	Calculate the price of the supplies before the sales tax was added. Show your work.


B.	Calculate the sales tax on the goods. Show your work.

Create an opening entry for a new business.

Jack Whitcombe and Sons is a consultant engineering firm. The accounts for the firm are as follows.

Bank	HST Recoverable	Car Expense
A/R—various	HST Payable	Office Expense
Supplies	J. Whitcombe, Capital	Rent Expense
Office Equipment	J. Whitcombe, Drawings	Wages Expense
Automobile	Fees Earned
A/P—various	Bank Charges

Journalize the following transactions, using the general journal page below. The rate for HST is 13%. Calculate and add the HST on all sales and purchase transactions. Do not provide explanations. The next page number of the journal is 16.

Transactions

Oct. 2 Cash Sales Slip
No. 102 to S. Stewart, $102.50 plus taxes.

6 Sales Invoice
No. 617 to Jack Morrison, $250.90 plus taxes.

10 Cheque Copy
No. 910 to Industrial Suppliers, $500 on account.

12 Cash Receipt
From Jack Mahoney, $322.50 on account.

18 Purchase Invoice
From Grand’s Stationers, $60.50 for office supplies plus HST of 7.87, total $68.37.

20 Cheque Copy
No. 911 to Jack Whitcombe, $525 for personal use.

24 Bank Debit Memo
$31.90 for bank service charge.

30 Cheque Copy
No. 912 to W. Moss, $900 for part-time wages.

31 Cash Sales Slip
No. 103 to J. Beck, $450 plus taxes.

31 Cheque Copy
The balances in the HST accounts for the previous period were: HST Recoverable $770 and HST Payable $1820. Cheque 913 was written to the Receiver General for $1050 to clear the accounts for that period.