Textbook: Accounting 1 (7th edition) By: George Syme, Tim Ireland, Colin Dodds.
The Opening Entry
Every accounting entry is recorded first in the journal as a way to show the starting balances as well as the different accounts.
1. Cash Sales Slip
2. Sales Invoice
3. Point of Sales Summaries
4. Purchase Invoice
5. Cheque Copies
6. Cash Receipts Daily Summary
7. Bank Advices
Taxes are a way in which the government raises funds to pay for services.
Two tax systems are used in Canada
1. PSG/ GST System
2. HST System
Accounting for Taxes
Businesses collect tax money on behalf of the government on all sales
Remitting Taxes- sending tax money collected on behalf of the government, to the government
Businesses with sales of taxable goods and services of $30,000 or more must register for a GST/HST number and collect and remit GST/HST
Accounting for Provincial Sales Tax
There are two accounts for HST in the ledger
Contra Account: An account that has a balance that reduces the balance of a closely related account
Eg 1; Sold $1,500 of goods on account to S.Wilson. HST amounts to $195
A/R S. Wilson $1,695
HST Payable $195
Eg 2; Sammy Services buys $500 of office equipment from Home Depot by cash. HST amounts to $65
Office Equipment $500
HST Recoverable $65
Eg 3; By the end of the month Sammy Services has a balance of $2,000 in HST payable and a balance of $600 in HST Recoverable. They must remit their taxes to the government.
HST Payable $2,000
HST Recoverable $600