HST Sample Transactions
Some us teaching-accounting types have been wondering about typical transactions now that the HST has replaced the former GST and PST. Below is my take:
Before:
Purchase of $1000 goods for resale (assume perpetual method):
dr Inventory 1000 dr GST Recoverable 50
cr Cash or A/P 1050
Not being a final seller of goods the company would be exempt from paying pst.
Sale of the same goods (assuming 100% markup):
dr Cash or A/R 2260
dr Cost of Goods Sold 1000
cr Sales 2000
cr Inventory 1000
cr PST Payable 160
cr GST Payable 100
Assuming this is the only sale the company had, remittance of the two taxes would be as follows:
dr PST Payable 160
cr Cash 160
dr GST Payable 100
cr GST Recoverable 50
cr Cash 50
The cheques or bank account credits going to our respective government agencies.
After:
Purchase:
dr Inventory 1000
dr HST Recoverable 130
cr Cash or A/P 1130
Sale:
dr Cash or A/R 2260
dr Cost of Goods Sold 1000
cr Sales 2000
cr Inventory 1000
cr HST Payable 260
Remittance to federal government only:
dr HST Payable 260
cr HST Recoverable 130
cr Cash 130
I think! Please comment if you have another way to do these transactions. I’m all ears.
