Copyright © 2008 Pearson Education Canada 7
CHAPTER 1 • UNIT 1 Line Master 1
Cal
cula
tion
of
Per
sona
l Fin
anci
al P
osit
ion
TO
TA
L V
AL
UE
OF
IT
EM
SO
WN
ED
TO
TA
LO
WE
D T
OC
RE
DIT
OR
S
PE
RSO
NA
LN
ET
WO
RT
H–
=
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Accounting Equation
Assets = Equities
(things owned) (claims against the assets)
For example:
$39 000 = $39 000
Assets = Liabilities + Owner’s Equity
(things owned) (claims against the assets)
$39 000 = $5 300 + ?
What is the owner’s claim against the assets?
8
CHAPTER 1 • UNIT 1 Line Master 2
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Balance Sheet Title:
Who? What? When?
Who?
What?
When?
Assets Liabilities+
Owner’sEquity
A = L + OE
9
CHAPTER 1 • UNIT 1 Line Master 3
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Accounting Equation:
Applications
(a) $ 15 000 = $7 000 + ?
(b) 35 000 = 9 000 + ?
(c) 50 000 = ? + 17 000
(d) 28 000 = ? + 21 000
(e) 150 000 = 89 000 + ?
Remember! A = L + OE
10
CHAPTER 1 • UNIT 1 Line Master 4
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Acc
ount
ing
Info
rmat
ion
Is U
sed
to M
ake
Dec
isio
ns
OW
NE
RS
CR
ED
ITO
RS
PER
SON
AL
USE
AC
CO
UN
TIN
G I
NFO
RM
AT
ION
INV
EST
OR
S
MA
NA
GE
ME
NT
GO
VE
RN
ME
NT
11
CHAPTER 1 • UNIT 1 Line Master 5
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Transactions: A Definition
A transaction is an exchange of values.
Receive something Give somethingof value. of value.
A Transaction
For example:
equipment $25 000 cashworth $25 000
12
CHAPTER 1 • UNIT 2 Line Master 6
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Generally Accepted Accounting Principles:GAAP—What Are They?
STANDARD RULES
AND GUIDELINES
FOR
ACCOUNTING
13
CHAPTER 1 • UNIT 2 Line Master 7
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
T-Account:Debit Side and Credit Side
TITLE
LEFT SIDE RIGHT SIDE
DEBIT CREDIT
14
CHAPTER 2 • UNIT 3 Line Master 8
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Balance Sheet and T-Accounts
Balance Sheet
Left Side Right SideAssets Liabilities
+Owner’s Equity
Assets originate on the left side Liabilities and Owner’s Equityof the balance sheet. originate on the right side of
the balance sheet.
Asset account balances are Liability and Owner’s Equityrecorded on the debit side. account balances are recorded
on the credit side.
Asset Accounts Liability and Owner’s Equity Accounts
Debit Credit Debit Credit
DEBIT CREDITBALANCE BALANCE
15
CHAPTER 2 • UNIT 3 Line Master 9
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Debit and Credit Theory: Assets
ASSETS = LIABILITIES + OWNER’S EQUITY
Debit CreditINCREASE DECREASE
• Assets originate on the LEFT SIDE of the balance sheet.
• Asset balances are recorded on the DEBIT SIDE.
• Assets INCREASE on the DEBIT SIDE.
• Assets DECREASE on the CREDIT SIDE.
16
CHAPTER 2 • UNIT 3 Line Master 10
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Debit and Credit Theory: Liabilities
ASSETS = LIABILITIES + OWNER’SEQUITY
Debit Credit Debit CreditDECREASE INCREASE
• Liabilities originate on the RIGHT SIDE of the balance sheet.
• Liability balances are recorded on the CREDIT SIDE.
• Liabilities INCREASE on the CREDIT SIDE.
• Liabilities DECREASE on the DEBIT SIDE.
17
CHAPTER 2 • UNIT 3 Line Master 11
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Debit and Credit Theory: Owner’s Equity
ASSETS = LIABILITIES + OWNER’S EQUITY
Debit Credit Debit Credit Debit CreditDECREASE INCREASE
• Owner’s Equity originates on the RIGHT SIDE of the balancesheet.
• Owner’s Equity balance is recorded on the CREDIT SIDE.
• Owner’s Equity INCREASES on the CREDIT SIDE.
• Owner’s Equity DECREASES on the DEBIT SIDE.
18
CHAPTER 2 • UNIT 3 Line Master 12
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Calculation of T-Account Balance
CashAug.1 6 000 Aug.2 2 400
4 1 800 8 1 6007 900 4 000
8 700
Calculate Calculatedebit total. credit total.
Balance 4 700
Calculate the differencebetween the debit and thecredit total and enter this balance on the larger side of the account.
19
CHAPTER 2 • UNIT 3 Line Master 13
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Income Statement Format
Who?What?When?
Revenue
Minus
Expenses
Equals
Net Income or (Net Loss)
20
CHAPTER 3 • UNIT 4 Line Master 14
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Income Statement:Determining Net Income (Net Loss)
Revenue – Expenses = Net Income (Net Loss)
(a) $200 000 – $130 000 = –––––––––––––––––––(b) 28 200 – 22 200 = –––––––––––––––––––(c) 69 000 – 73 000 = –––––––––––––––––––(d) 18 500 – 13 700 = –––––––––––––––––––(e) 42 000 – 49 000 = –––––––––––––––––––
• When REVENUE is greater than expenses there is a NET INCOME.
• When EXPENSES are greater than revenue there is a NET LOSS.
21
CHAPTER 3 • UNIT 4 Line Master 15
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Owner’s Drawings Accounts: What Is It?
A. Trieu, Capital 300
DR. CR.
Decrease Increase
(c) Withdrawals (a) Owner’s Investment(d) Losses (b) Profits
A. Trieu, Drawings 301
DR. CR.
(e) Withdrawals(f) Salary(g) Personal payments
• The owner’s Drawings account is a record of all withdrawals ofassets by the owner.
22
CHAPTER 3 • UNIT 4 Line Master 16
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Calculating the New Capital: Net Income and Drawings,Drawings Smaller than Net Income
Owner’s EquityA. Trieu, Capital July 1 $33 000
Add: Net Income for July $9 000
Less: A. Trieu, Drawings 1 500
Increase in Capital 7 500
A. Trieu, Capital July 31 $ ?
Owner’s EquityA. Trieu, Capital August 1 $40 500
Add: Net Income for August $11 500
Less: A. Trieu, Drawings 2 100
Increase in Capital ?00
A. Trieu, Capital August 31 $ ?
• Net Income INCREASES Capital.
• Drawings DECREASE Capital.
23
CHAPTER 3 • UNIT 4 Line Master 17
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Calculating the New Capital: Net Loss and Drawings,Drawings Larger than Net Income
Owner’s EquityA. Trieu, Capital September 1 $49 900
Add: Net Income for September $9 800
Less: A. Trieu, Drawings 1 800
Increase in Capital ?00
A. Trieu, Capital September 30 $ ?
Owner’s EquityA. Trieu, Capital October 1 $57 900
Less: Net Loss for October $ 950
Less: A. Trieu, Drawings 1 600
Decrease in Capital ?00
A. Trieu, Capital October 31 $ ?
• Net Loss DECREASES Capital.
24
CHAPTER 3 • UNIT 4 Line Master 18
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The General Ledger
GENERAL LEDGER
Cash Accounts Receivable Supplies
Land Building Equipment
Accounts Payable Bank Loan Mortgage Payable
Owner, Capital Owner, Drawings
Sales Revenue Fees Earned
Rent Expense Salaries Expense Advertising Expense
Delivery Expense Hydro Expense Miscellaneous Expense
25
CHAPTER 3 • UNIT 4 Line Master 19
Assets
Liabilities
Owner’sEquity
Revenue
Expenses
BalanceSheet
Income
Statement
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Revenue and Expense AccountsDetermine Net Income or Loss
Revenue and Expense Accountsare used to determineNet Income or Loss
Net Income or Loss
affectsthe
Owner’s Capital Account
DR. CR.Decrease IncreaseLoss Net Income
26
CHAPTER 3 • UNIT 5 Line Master 20
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Inco
me
Stat
emen
t Acc
ount
s
Deb
its a
nd c
redi
ts f
or in
com
e st
atem
ent a
ccou
nts
are
dete
rmin
edby
how
they
aff
ect o
wne
r’s
equi
ty.
Ow
ner’
s E
quit
y
Deb
itC
redi
tD
ecre
ase
Incr
ease
Exp
ense
s de
crea
seR
even
ue in
crea
ses
owne
r’s
equi
ty.
owne
r’s
equi
ty.
Exp
ense
sR
even
ue
Deb
itC
redi
tD
ebit
Cre
dit
Exp
ense
sD
ecre
ase
Dec
reas
eR
even
uein
crea
sein
crea
ses
on th
eon
the
debi
t sid
e.cr
edit
side
.
27
CHAPTER 3 • UNIT 5 Line Master 21
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Summary of Debit and Credit Theory
Balance Sheet Accounts
A = L + OE
Asset Accounts Liability Accounts Owner’s Equity Account
Debit Credit Debit Credit Debit CreditIncrease Decrease Decrease Increase Decrease Increase+ – – + – +
Income Statement Accounts
Owner’s Equity Account
Debit CreditDecrease Increase– +
Expense Accounts Revenue Accounts
Debit Credit Debit CreditIncrease Decrease Decrease Increase+ – – +
28
CHAPTER 3 • UNIT 5 Line Master 22
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Transaction Analysis:Asking the Right Questions
1. What accounts were affected?
2. Were the accounts A, L, OE, R, or E accounts?
3. Did the accounts increase or decrease?
4. Were the accounts debited or credited?
29
CHAPTER 3 • UNIT 5 Line Master 23
Copyright © 2008 Pearson Education Canada
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Journal:Where TransactionsAre First Recorded
T R A N S A C T I O N S
JOURNAL
• Transactions are first recorded chronologically in the journal.
• The journal contains a complete record of each transaction: date,debit, credit, amount, and explanation.
• Journals may be completed manually in a book or, using a com-puter, in a computer file.
30
CHAPTER 4 • UNIT 6 Line Master 24
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
• The LEDGER is a group of accounts.
• Each ACCOUNT shows a complete, up-to-date record of alltransactions affecting ONLY that particular account.
• The ledger may be a manually prepared paper record or a set offiles in a computer system.
• POSTING is the process of transferring information to the ledgerFROM the journal.
31
CHAPTER 4 • UNIT 7 Line Master 25
Copyright © 2008 Pearson Education Canada
Posting to the Ledger
T R A N S A C T I O N S
JOURNAL
LEDGER
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Balance-column Form of Ledger Account
Cash
Mar. 1 2 200 Mar. 4 1503 75 7 2756 400 425
2 675
Balance 2 250
Cash 100
20__
Mar. 1 J1 2 0 0 0 00 DR. 2 0 0 0 003 J1 7 5 00 DR. 2 0 7 5 004 J1 1 5 0 00 DR. 1 9 2 5 006 J2 4 0 0 00 DR. 2 0 2 5 007 J3 1 2 7 5 00 DR. 2 2 5 0 00
• The balance-column form of account provides a balance after eachtransaction.
• The DR./CR. column indicates whether the balance is a debit or acredit balance.
• There is less chance of error in the balance-column form ofaccount than in a T-account.
32
CHAPTER 4 • UNIT 7 Line Master 26
Copyright © 2008 Pearson Education Canada
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Determining Account Balances
Cash
May 1 2 500 May 3 1 4004 300 9 7306 1 630
33
CHAPTER 4 • UNIT 7 Line Master 27
Copyright © 2008 Pearson Education Canada
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
Cash 100
20__
May 1 2 5 0 0 003 1 4 0 0 004 3 0 0 006 1 6 3 0 007 7 3 0 00
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
Bank Loan 230
20__
May 1 4 0 0 0 00 CR. 4 0 0 0 0031 7 0 0 00
June 30 7 0 0 00
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
A. Singh, Capital 300
20__
May 1 2 5 0 0 0 0031 2 0 0 0 00
June 30 2 4 0 0 00
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Posting to the Ledger
20__
June 1 Cash 5 2 4 00Sales Revenue 5 2 4 00
Sold to R. Moffat for cash.3 Office Supplies 7 5 00
Cash 7 5 00Bought miscellaneous supplies for cash.
34
CHAPTER 4 • UNIT 7 Line Master 28
Copyright © 2008 Pearson Education Canada
General Journal PAGE
POSTDATE PARTICULARS REF. DEBIT CREDIT
General LedgerACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
3
Cash 100
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Debit Credit2 0001 500
630720 1 835
3 0154 850 4 750
Debit Credit27013565
19585
21525
470 520
Debit Credit27013565
19585
215470 495
Debit Credit2 3701 630
720410
2 5401 1701 690
5 130 5 400
35
CHAPTER 4 • UNIT 7 Line Master 29
Copyright © 2008 Pearson Education Canada
1. Difference: $100Addition or subtraction error
2. Difference: $50Divided by 2 = $25Locate this figure ($25) — wrong sideof trial
3. Difference: $25Is there a $25 account missing?
4. Difference: $270Is the difference evenly divisible by 9?If so, look for a transposition error.
How to Locate Trial Balance Errors—We All Make Mistakes!
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Introducing the Accounting Cycle
36
CHAPTER 4 • UNIT 7 Line Master 30
Copyright © 2008 Pearson Education Canada
Business Transactions
ACCOUNTING CYCLE
NewAccountingPeriod Begins
FinancialStatementsPrepared
Journalizing
Ledger TrialBalance
FinancialStatements
SourceDocuments
Journal
Proof
Posting
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Source Documentsand the Principle of Objectivity
SOURCEDOCUMENTS
— cash sales slip
— sales invoice
— purchase invoice
— cheque copy
— list of chequesreceived
VALUE
PRINCIPLE OFOBJECTIVITY
37Copyright © 2008 Pearson Education Canada
CHAPTER 4 • UNIT 8 Line Master 31
RECORD OFA
TRANSACTION
EVIDENCE
INFORMATION
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Pre
pari
ng F
inan
cial
Sta
tem
ents
38 Copyright © 2008 Pearson Education Canada
CHAPTER 5 • UNIT 9 Line Master 32
Tri
al B
alan
ce
Ass
ets
Lia
bilit
ies
Cap
ital
Rev
enue
Exp
ense
s
Inco
me
Stat
emen
tB
alan
ce S
heet
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The
Six
-Col
umn
Wor
k Sh
eet
39
CHAPTER 5 • UNIT 9 Line Master 33
Copyright © 2008 Pearson Education Canada
AC
CT.
TR
IAL
BA
LAN
CE
INC
OM
E S
TAT
EM
EN
TB
ALA
NC
E S
HE
ET
AC
CO
UN
T T
ITLE
SN
O.
DE
BIT
CR
ED
ITD
EB
ITC
RE
DIT
DE
BIT
CR
ED
IT
Ass
ets
XX
X–
XX
X–
XX
X–
XX
X–
XX
X–
XX
X–
Lia
bilit
ies
XX
X–
XX
X–
XX
X–
XX
X–
XX
X–
XX
X–
Ow
ner’
s E
quity
—C
apita
lX
XX
–X
XX
–
—D
raw
ings
XX
X––
XX
X–
Rev
enue
XX
X–
XX
X–
XX
X–
XX
X–
Exp
ense
sX
XX
–X
XX
–
XX
X–
XX
X–
XX
X–
XX
X–
•T
he w
ork
shee
t: A
dev
ice
that
org
aniz
es in
form
atio
n th
at is
use
d to
pre
pare
the
fina
ncia
l sta
tem
ents
.
}}
}}
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Work Sheet Addedto the Accounting Cycle
40 Copyright © 2008 Pearson Education Canada
CHAPTER 5 • UNIT 9 Line Master 34
Business Transactions
ACCOUNTING CYCLE
NewAccountingPeriod Begins
Journalizing
Ledger TrialBalance
FinancialStatementsSource
Documents
Journal
Proof
Posting
WorkSheet
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Steps in theManual Accounting System
SOURCE DOCUMENTS
JOURNAL
LEDGER
TRIAL BALANCE
FINANCIAL STATEMENTS
41
CHAPTER 5 • UNIT 10 Line Master 35
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Adjusting Entries
What are they?• a series of journal entries
When are they recorded?• at the end of the accounting period
Why are they prepared?• to ensure that the account balances and the financial
statements are correct for the period
How do they differ from other journal entries?• cash is never affected with an adjusting entry• an income statement account and a balance sheet account are
affected by each adjustment
Types of Adjusting Entries:• Prepaid Expenses
Supplies Expense xxxSupplies xxx
To record supplies used during the period.
• Amortization
Amortization Expense xxxAccumulated Amortization xxx
To record amortization for the period.
CHAPTER 6 • UNIT 11 Line Master 36
42 Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
43Copyright © 2008 Pearson Education Canada
Closing the Books
CHAPTER 6 • UNIT 13 Line Master 37
Expenses
A creditbalance in theIncome Summaryaccountindicatesnet incomehas been earned.
Expenses Balance
Balance
XX XX XXXX XXXX
XXXX
Revenue
Income Summary
XX
XX XX
Balance
XX
Owner, Capital
X
X
Balance X
Owner, Drawings
X
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
44 Copyright © 2008 Pearson Education Canada
Adjusting and Closing Entries Addedto the Accounting Cycle
CHAPTER 6 • UNIT 13 Line Master 38
Business Transactions
ACCOUNTING CYCLE
NewAccountingPeriod Begins
Work SheetIncludingTrial BalancePrepared
FinancialStatementsPrepared
Adjusting andClosing EntriesJournalized
Adjusting andClosing EntriesPosted
Journalizing
Proof
Ledger
Ledger
SourceDocuments
Journal
Journal
Posting
Post-ClosingTrial Balance
FinancialStatements
WorkSheet
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Basic Schedule of Cost of Goods Sold
Warrendon SportsSchedule of Cost of Goods Sold
For the month ended May 31, 20—
Merchandise Inventory, May 1 $16 000Add: Purchases 36 000Total Cost of Merchandise 52 000Less: Merchandise Inventory, May 31 18 000Cost of Goods Sold $34 000
• The schedule of cost of goods sold is prepared before theincome statement.
45Copyright © 2008 Pearson Education Canada
CHAPTER 7 • UNIT 14 Line Master 39
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Income Statement for a Merchandising Company
Warrendon SportsIncome Statement
For the month ending May 31, 20—
RevenueSales $56 000
Cost of Goods SoldCost of Goods Sold (per schedule) 34 000Gross Profit 22 000
Operating ExpensesAdvertising Expense $2 400Delivery Expense 700Office Expense 400Miscellaneous Expense 500Rent Expense 2 600Salaries Expense 5 400Utilities Expense 600Total Expenses 12 600Net Income $9 400
• There are THREE sections.• The Cost of Goods Sold ($34 000) is obtained from the Schedule
of Cost of Goods Sold.
46 Copyright © 2008 Pearson Education Canada
CHAPTER 7 • UNIT 14 Line Master 40
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47Copyright © 2008 Pearson Education Canada
Exp
ande
d Sc
hedu
le o
f C
ost
of G
oods
Sol
d
War
rend
on S
port
sSc
hedu
le o
f C
ost o
f G
oods
Sol
dFo
r th
e m
onth
end
ed J
une
30, 2
0—
Mer
chan
dise
Inv
ento
ry, J
une
1$1
8 00
0A
dd:
Purc
hase
s$4
2 40
0L
ess:
Purc
hase
s R
etur
ns a
nd A
llow
ance
s$8
000
Purc
hase
s D
isco
unts
400
8 40
0N
et P
urch
ase
Cos
t34
000
Add
:T
rans
port
atio
n-in
2 00
0To
tal C
ost o
f M
erch
andi
se P
urch
ased
36 0
00C
ost o
f M
erch
andi
se A
vaila
ble
for
Sale
54 0
00L
ess:
Mer
chan
dise
Inv
ento
ry, J
une
3020
000
Cos
t of
Goo
ds S
old
$34
000
CHAPTER 7 • UNIT 14 Line Master 41
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48 Copyright © 2008 Pearson Education Canada
CHAPTER 7 • UNIT 14 Line Master 42
Pur
chas
es
Deb
it
The
se a
ccou
nts
norm
ally
decr
ease
ow
ner's
equ
ity
and
have
deb
it b
alan
ces.
Cre
dit
The
se a
ccou
nts
norm
ally
incr
ease
ow
ner's
equ
ity
and
have
cre
dit b
alan
ces.
XX
XX
Del
iver
yE
xpen
seP
urch
ases
Ret
urns
and
All
owan
ces
Sal
es
Ow
ner's
Equ
ity
• R
ules
of
debi
t and
cre
dit f
or m
erch
andi
sing
acc
ount
s ar
e de
term
ined
by
how
owne
r's e
quit
y is
aff
ecte
d.
Sum
mar
y of
Deb
its
and
Cre
dits
for
Mer
chan
disi
ng A
ccou
nts
Tra
nspo
rtat
ion-
in
XX
X
Sal
es D
isco
unts
X
Sal
es R
etur
nsan
d A
llow
ance
sP
urch
ases
Dis
coun
ts
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
49Copyright © 2008 Pearson Education Canada
CHAPTER 8 • UNIT 17 Line Master 43
Cas
h
6 00
0
1 00
0
400
400
500
100
500
100
B. A
sim
ovJ.
Pag
eF.
Wan
g
B. A
sim
ovJ.
Pag
eF.
Wan
g
GE
NE
RA
L L
ED
GE
R
AC
CO
UN
TS
RE
CE
IVA
BL
E L
ED
GE
R
Cre
atin
g an
Acc
ount
s R
ecei
vabl
e L
edge
r
Acc
ount
s R
ecei
vabl
e
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
50 Copyright © 2008 Pearson Education Canada
CHAPTER 8 • UNIT 17 Line Master 44
Creating an Accounts Payable Ledger
GENERAL LEDGER
ACCOUNTS PAYABLE LEDGER
Accounts Payable
B. Brandt
Bank LoanMortgagePayable
J. Hagadorn,Capital
J. Hagadorn,Drawings
400
200
5 000 50 000 34 998 500
B. Galea
50
B. Lailey
B. Brandt B. Galea B. Lailey
150
200 50 150
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
51Copyright © 2008 Pearson Education Canada
CHAPTER 8 • UNIT 18 Line Master 45
Acc
ount
ing:
Info
rmat
ion
for
Dec
isio
n M
aker
s
Acc
ount
ing
Syst
em
Info
rmat
ion
To
Supp
ort
Dec
isio
n M
akin
g
Payr
oll
Sys
tem
Acc
ount
sR
ecei
vabl
eS
yste
m
Acc
ount
sPa
yabl
eS
yste
m
Gen
eral
Led
ger
Sys
tem
Cas
hC
ontr
olS
yste
m
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
52 Copyright © 2008 Pearson Education Canada
Control Account Balances Must Equalthe Total of the Subsidiary Ledgers
CHAPTER 8 • UNIT 18 Line Master 46
Fraser EnterprisesGeneral Ledger Trial Balance
February 28, 20—Cash $ 2 000Accounts Receivable 3 500Supplies 500Building 60 000Equipment 3 000Accounts Payable $ 2 000Bank Loan 20 000D. Fraser, Capital 47 000
$69 000 $69 000
Fraser EnterprisesSchedule of Accounts Receivable
February 28, 20—C. Bard $ 1 000D. Meyer 700T. Roesler 800W. Turko 1 000
$ 3 500
Fraser EnterprisesSchedule of Accounts Payable
February 28, 20—Acme Ltd. $ 200Evans Co. 900Falco Ltd. 400Mentor Ltd. 500
$ 2 000
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
53Copyright © 2008 Pearson Education Canada
CHAPTER 10 • UNIT 21 Line Master 47
The
Spe
cial
Jou
rnal
Sys
tem
Sour
ce D
ocum
ent
Typ
e of
Tra
nsac
tion
Jour
nal
Cas
h S
ales
Sli
ps
All
Cas
h R
ecei
ved
Sal
es o
n A
ccou
nt
Pur
chas
es o
n A
ccou
nt
All
Pay
men
ts
Cas
h R
ecei
pts
Jour
nal
Sal
es J
ourn
al
Pur
chas
es J
ourn
al
Cas
h Pa
ymen
ts J
ourn
al
Cas
h R
ecei
pts
Ban
k C
redi
t Not
es
Sal
es I
nvoi
ces
Cre
dit I
nvoi
ces
Issu
ed
Pur
chas
e In
voic
es
Cre
dit I
nvoi
ces
Rec
eive
d
Che
que
Cop
ies
Ban
k D
ebit
Not
es
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
54 Copyright © 2008 Pearson Education Canada
The Purchasing System:Ordering Goods
Purchase Requisition
Purchase Order
Supplier Goods Shipped
Purchase Invoice
CHAPTER 10 • UNIT 21 Line Master 48
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Purchasing System:Matching Process
Goods Received
Receiving ReportPurchase Order
andMatching Process Purchase Invoice
andReceiving Report
Approved Invoice
Payment
55Copyright © 2008 Pearson Education Canada
CHAPTER 10 • UNIT 21 Line Master 49
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
The Purchasing System:Paying Approved Invoices
Goods Received Purchase Invoicefrom Supplier Received from
Supplier
Receiving Report
Matching Process
Receiving Purchase PurchaseReport Order Invoice
Must Agree
Approve Invoice Journalized and Posted
Filed until Payment Due Date File
Cheque Issued Journalized and Posted
56 Copyright © 2008 Pearson Education Canada
CHAPTER 10 • UNIT 21 Line Master 50
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
57Copyright © 2008 Pearson Education Canada
CHAPTER 10 • UNIT 22 Line Master 51
The Sales System
SALESINVOICE
PREPARED
SALESJOURNAL
TOCUSTOMER
ACCOUNTSRECEIVABLE
LEDGER
GENERALLEDGER
SCHEDULEOF ACCOUNTSRECEIVABLE
TRIALBALANCE
STATEMENTSTO
CUSTOMERS
TO SALESDEPARTMENT
(SHIPPING)
4 COPIES
COPY 1 COPY 2 COPY 3 COPY 4
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
58 Copyright © 2008 Pearson Education Canada
CHAPTER 10 • UNIT 24 Line Master 52
Dir
ect
Pos
ting
to
Subs
idia
ry L
edge
rs
Sal
es in
voic
esC
redi
t inv
oice
sC
ash
rece
ived
Post
toP
repa
reA
ccou
nts
Rec
eiva
ble
Led
ger
Sch
edul
e of
Acc
ount
sR
ecei
vabl
e
• • •
Pur
chas
es in
voic
esC
redi
t inv
oice
sC
hequ
e co
pies
Post
toP
repa
reA
ccou
nts
Paya
ble
Led
ger
Sch
edul
e of
Acc
ount
sPa
yabl
e
• • •
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
59Copyright © 2008 Pearson Education Canada
CHAPTER 10 • UNIT 24 Line Master 53
Pos
ting
to
the
Gen
eral
Led
ger
All
sour
cedo
cum
ents
All
five
jour
nals
Ent
er in
Pre
pare
Tri
alB
alan
ceG
ener
alL
edge
r
• • •
Post
to
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
60 Copyright © 2008 Pearson Education Canada
CHAPTER 11 • UNIT 25 Line Master 54
Cash received
Control of Cash Receipts
Cash depositedin bank by
the office manager
Copy 1 Copy 2
Accountsreceivable clerk
Posts to AccountsReceivable
Ledger as credits
Records inCash Receipts
Journal
Sends monthlystatements to
customers
Posts toGeneral Ledger
monthly
Accountant
List of cash received preparedby the mail clerk
Prepares scheduleof accountsreceivable
Preparestrial
balance
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Bank Reconciliation Procedures
BANK RECORDS:
• BALANCE in bank
• ADD —unrecorded deposits
• SUBTRACT —outstanding cheques
must equal
COMPANY RECORDS:
• BALANCE in ledgers
• ADD —credit memos
—interest earned
—money collected
• SUBTRACT —debit memos
—NSF cheques
—interest expense
—other bank charges
61Copyright © 2008 Pearson Education Canada
CHAPTER 11 • UNIT 26 Line Master 55
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
62 Copyright © 2008 Pearson Education Canada
Bal
ance
She
et M
etho
d: S
tep
1P
repa
re a
n A
ge A
naly
sis
Acc
ount
s R
ecei
vabl
e A
ge A
naly
sis
Dec
embe
r 31
, 20—
Bal
ance
ofC
urre
nt1–
3031
–60
61–9
0+9
0A
ccou
nts
Acc
ount
sD
ays
Day
sD
ays
Day
sC
usto
mer
Rec
eiva
ble
Rec
eiva
ble
Ove
rdue
Ove
rdue
Ove
rdue
Ove
rdue
Axo
n$
400
$40
0
Bel
l20
050
$50
$10
0
Cla
rk2
600
2 60
0
Der
vin
800
$80
0
Elic
huk
600
600
All
Oth
ers
48 4
0040
000
4 80
090
080
0$1
900
Tota
l$5
3 00
0$4
3 65
0$4
850
$1 0
00$1
600
$1 9
00
CHAPTER 12 • UNIT 27 Line Master 56
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
63Copyright © 2008 Pearson Education Canada
Bal
ance
She
et M
etho
d: S
tep
2E
stim
ate
a P
erce
ntag
e L
oss
Est
imat
ed B
ad D
ebts
For
the
Yea
r 20
—
Per
cent
age
Est
imat
edA
ge o
f Acc
ount
sA
mou
ntto
be
Unc
olle
ctib
leB
ad D
ebts
Est
imat
e
Cur
rent
$43
650
1%$
436
1-30
day
s4
850
4%19
431
-60
days
1 00
010
%10
061
-90
days
1 60
020
%32
0+
90 d
ays
1 90
050
%95
0To
tal
$53
000
$2 0
00
CHAPTER 12 • UNIT 27 Line Master 57
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
64 Copyright © 2008 Pearson Education Canada
Pre
pari
ng t
he I
nven
tory
Adj
ustm
ent
on t
he W
ork
Shee
tCHAPTER 12 • UNIT 28 Line Master 58
AC
CT.
TR
IAL
BA
LAN
CE
AD
JUS
TM
EN
TIN
CO
ME
STA
TE
ME
NT
BA
LAN
CE
SH
EE
TA
CC
OU
NT
TIT
LES
NO
.D
EB
ITC
RE
DIT
DE
BIT
CR
ED
ITD
EB
ITC
RE
DIT
DE
BIT
CR
ED
IT
Fras
er E
nter
pris
esW
ork
Shee
tFo
r th
e ye
ar e
nded
Dec
embe
r 31
, 20—
Cas
h10
111
20
00
0011
20
00
00
Acc
ount
s R
ecei
vabl
e11
053
00
000
530
00
00
Allo
wan
ce f
or B
ad D
ebts
111
50
00(a
) 1
95
000
20
00
00
Mer
ch. I
nven
tory
, Jan
. 112
090
00
000
900
00
0086
00
000
860
00
00
Supp
lies
125
45
00
00(b
) 2
50
000
20
00
00
Step
1T
rans
fer
the
begi
nnin
g in
vent
ory
to th
e de
bit c
olum
n of
the
inco
me
stat
emen
t.
Step
2R
ecor
d th
e ne
w in
vent
ory
in th
ecr
edit
colu
mn
of th
e in
com
e st
atem
ent.
Step
3R
ecor
d th
e in
vent
ory
in th
e de
bit
colu
mn
of th
e ba
lanc
e sh
eet.
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
65Copyright © 2008 Pearson Education Canada
The Complete Accounting Cycle
CHAPTER 12 • UNIT 29 Line Master 59
Business Transactions
ACCOUNTING CYCLE
New AccountingPeriod Begins
Work SheetIncludingTrial BalancePrepared
FinancialStatementsPrepared
Adjusting andClosing EntriesJournalized
Adjusting andClosing EntriesPosted
ReversingEntriesPosted
ReversingEntriesJournalized
Journalizing
Proof
Ledger
Ledger
Journal
Journal
Posting
Ledger
Journal Post-closingTrial Balance
FinancialStatements
WorkSheet
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
66 Copyright © 2008 Pearson Education Canada
CHAPTER 13 • UNIT 31 Line Master 60
The
Pay
roll
Acc
ount
ing
Syst
em
Gro
ssE
arni
ngs
Payr
oll
Jour
nal
Em
ploy
ee's
Ear
ning
sR
ecor
d
Pay
Che
ques
T4
Sli
p
Gen
eral
Led
ger
Acc
ount
s
Gen
eral
Jour
nal
Ent
ries
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
67Copyright © 2008 Pearson Education Canada
Accounting for Partnerships
• Characteristics of Sole Proprietorships, Partnerships, andCorporations are . . .
• Advantages of each form of business are . . .
• Disadvantages of each form of business are . . .
• Journal entries to establish a partnership are . . .
• Methods to allocate Net Income or Net Loss between the partnersare . . .
• Statement of Partners’ Equity looks like . . .
CHAPTER 13 • UNIT 30 Line Master 61
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
68 Copyright © 2008 Pearson Education Canada
Division of Partnership Net Income
Johnson and Casey Design StudioStatement of Distribution of Net Income
October 31, 20—
Net Income to be divided $150 000
Johnson Casey Total
Salaries $55 000 $55 000 $110 000
Interest on beginningcapital 10% 9 000 8 000 17 000
Remaining net incomeshared equally 11 500 11 500 23 000
Total $75 500 $74 500 $150 000
NOTE: Beginning capital for Johnson was $90 000 and for Casey, $80 000.
CHAPTER 13 • UNIT 30 Line Master 62
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
Accounting for Corporations
• Journal entries for the issuance of shares for cash and for otherassets are . . .
• Types of shares:Common, with stated value, par value or no parPreferred, with stated value, par value or no par
• Features associated with preferred shares are:
Cumulative
Convertible
Callable
Participating
• Shareholders’ Equity consists of:
Share Capital
Retained Earnings
• Journal entries for the Declaration and Payment of cash dividendsare . . .
• Shareholders’ Equity on the Balance Sheet and the Statment ofRetained Earnings look like . ..
69
CHAPTER 13 • UNIT 31 Line Master 63
Copyright © 2008 Pearson Education CanadaFull file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
70 Copyright © 2008 Pearson Education Canada
Balance Sheet—Account Form • Line Master 64
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
71Copyright © 2008 Pearson Education Canada
Transaction Sheet • Line Master 65
TRANSACTION SHEET
Assets = Liabilities + Equity
_________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________
Balances $ $ $ $ $ $ $_________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
_________ _________ _________ _________ _________ _________ _________ _________
New Balance _________ _________ _________ _________ _________ _________ _________
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
72 Copyright © 2008 Pearson Education Canada
Trial Balance Form • Line Master 66
ACC.ACCOUNT NO. DEBIT CREDIT
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
73Copyright © 2008 Pearson Education Canada
Balance Sheet—Report Form and Financial Statements, 2 Column • Line Master 67
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
74 Copyright © 2008 Pearson Education Canada
Balance Sheet—Report Form and Financial Statements, 3 Column • Line Master 68
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
75Copyright © 2008 Pearson Education Canada
T-Account Forms • Line Master 69
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
76 Copyright © 2008 Pearson Education Canada
General Journal • Line Master 70
General Journal PAGE
POSTDATE PARTICULARS REF. DEBIT CREDIT
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
77Copyright © 2008 Pearson Education Canada
Accounts Payable and Receivable Ledger, Long Forms • Line Master 71
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
78 Copyright © 2008 Pearson Education Canada
Accounts Payable and Receivable Ledger, Short Forms • Line Master 72
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
ACCOUNT NO.
POST. DR.DATE PARTICULARS REF. DEBIT CREDIT CR. BALANCE
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
79Copyright © 2008 Pearson Education Canada
Work Sheet, 6 Column • Line Master 73
AC
CT.
TR
IAL
BA
LAN
CE
INC
OM
E S
TAT
EM
EN
TB
ALA
NC
E S
HE
ET
AC
CO
UN
T T
ITLE
SN
O.
DE
BIT
CR
ED
ITD
EB
ITC
RE
DIT
DE
BIT
CR
ED
IT
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
80 Copyright © 2008 Pearson Education Canada
Work Sheet, 8 Column • Line Master 74
AC
CT.
TR
IAL
BA
LAN
CE
AD
JUS
TM
EN
TIN
CO
ME
STA
TE
ME
NT
BA
LAN
CE
SH
EE
TA
CC
OU
NT
TIT
LES
NO
.D
EB
ITC
RE
DIT
DE
BIT
CR
ED
ITD
EB
ITC
RE
DIT
DE
BIT
CR
ED
IT
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
81Copyright © 2008 Pearson Education Canada
Work Sheet, 10 Column • Line Master 75
TRIA
L B
ALA
NC
EA
DJU
STM
EN
TA
DJU
STE
D T
RIA
L B
ALA
NC
EIN
CO
ME
STA
TEM
EN
TB
ALA
NC
E S
HE
ET
ACC
OU
NT
TITL
ES
DE
BIT
CR
ED
ITD
EB
ITC
RE
DIT
DE
BIT
CR
ED
ITD
EB
ITC
RE
DIT
DE
BIT
CR
ED
IT
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
82 Copyright © 2008 Pearson Education Canada
Columnar Journal, page 1 • Line Master 76
COLUMNAR JOURNAL
ACCOUNT OR REF. CASH OTHER ACCOUNTS
DATE EXPLANATION NO. DEBIT CREDIT P.R. DEBIT CREDIT
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
83Copyright © 2008 Pearson Education Canada
Columnar Journal, page 2 • Line Master 77
PAGE
GST GST PSTACCOUNTS RECEIVABLE SALES REFUNDABLE PAYABLE PAYABLE PURCHASES ACCOUNTS PAYABLE
DEBIT CREDIT CREDIT DEBIT CREDIT CREDIT DEBIT DEBIT CREDIT
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
84 Copyright © 2008 Pearson Education Canada
Purchase Journal • Line Master 78PU
RC
HA
SES
JOU
RN
AL
PAG
E
GST
AC
CO
UN
TS
UT
ILIT
IES
DA
TE
RE
F.C
RE
DIT
OR
P.R
.PU
RC
HA
SES
REFU
NDAB
LEPA
YA
BL
EEX
PEN
SEO
TH
ER
AC
CO
UN
TS
NO
.D
EB
ITD
EB
ITC
RE
DIT
DE
BIT
AC
CO
UN
TP.
R.
DE
BIT
M
Full file at http://testbank360.eu/solution-manual-accounting-for-canadian-colleges-fifth-edition-5th-edition-palmer
85Copyright © 2008 Pearson Education Canada
Sales Journal • Line Master 79
SAL
ES
JOU
RN
AL
PAG
E
AC
CO
UN
TSG
STPS
TD
AT
EIN
V.
CU
STO
ME
RT
ER
MS
P.R
.RE
CEIV
ABL
ESA
LE
SPA
YA
BL
EPA
YA
BL
EN
O.
DE
BIT
CR
ED
ITC
RE
DIT
CR
ED
IT
M
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86 Copyright © 2008 Pearson Education Canada
Cash Receipts Journal • Line Master 80C
ASH
RE
CE
IPT
S JO
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NA
LPA
GE
SAL
ES
AC
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87Copyright © 2008 Pearson Education Canada
Cash Payments Journal • Line Master 81
CA
SH P
AY
ME
NT
S JO
UR
NA
LPA
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AC
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88 Copyright © 2008 Pearson Education Canada
Payroll Journal • Line Master 82C
OM
PAN
Y N
AM
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____
____
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____
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PAY
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otal
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89Copyright © 2008 Pearson Education Canada
The Computer Accounting Cycle • Line Master 83
Business Transactions
ACCOUNTING CYCLE
New AccountingPeriod Begins
Data Entry(Debits andCredits)
• Adjusting Entries• Financial Statements• Closing Entries• Post-Closing Trial Balance
• Invoices• Statements• Journals• Ledgers• Trial Balances• Financial Statements
DAILY
DAILY
END OFFISCAL PERIOD
The Computer Accounting Cycle
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90 Copyright © 2008 Pearson Education Canada
Unit Teaching Plan • Line Master 84
UNIT DESIGNATION
1. OBJECTIVES•••••
2. INTRODUCTION
3. SEQUENCE AND LESSON PLANNINGTopic Activities No. of Periods
(a)
(b)
(c)
(d)
(e)
4. TIMELINE
5. RESOURCE PLANNING
6. EVALUATION OF STUDENT ACHIEVEMENT
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Harmonized Sales Tax (HST)GST is a 7% tax that applies to taxable goods and services sold in Canada.
In three provinces (Nova Scotia, New Brunswick and Newfoundland) the GST iscombined with provincial sales tax and is applied at a HST rate of 15%. HST is chargedon taxable goods and services in these provinces. The combined HST rate is made up of8% provincial sales tax and 7% GST. The 7% GST is collected in all provinces either asa separate tax or a combined tax. HST follows the same basic operating rules as GST andthe accounting entries for collection and remittance are similar. In fact, when you com-plete your remittance form you do not have to separate the tax collected within the 15%rate. Complete information for Goods and Services Tax/Harmonized Sales Tax is availableon the Revenue Canada Small Business Information Seminar web sitewww.ccra.adrc.gc.ca.
Recording HSTHST applies to goods and services sold and purchased. The business collects HST fromcustomers on the sale, deducts HST paid to suppliers and remits the difference to the fed-eral government. The accounting entries are reduced in provinces using the HST systemsince the business is recording a single tax rather than accounting for PST and GST sep-arately.
HST PayableThe amount of Harmonized Sales Tax collected is a liability. It is owed to the federal gov-ernment. The amount of HST collected during the month is credited to the HST Payableaccount. Is this the amount of tax that is sent to the federal government? No. The businessremits HST collected minus HST paid. How does a business record HST paid (input taxcredit) on goods and services purchased for the business?
HST PayableJan. 3 201.15
4 91.076 132.329 116.27
10 87.71
31 106.543 055.93
HST Input Tax CreditWhen a business purchases goods or services it is charged the cost price of the item plusHST. When Warrenton Sports purchases a set of skis for resale it is charged the cost price$500 plus $75 HST. What is the amount recorded in the Purchase account? The $500 costprice. Why is the $75 HST paid to suppliers before remitting the tax to the federal gov-ernment. Therefore, Warrenton receives an input tax credit for the $75 paid.
HST Refundable 75Purchases 500
Cash 575Cash purchase of skis
91Copyright © 2008 Pearson Education Canada
Harmonized Sales Tax (HST)
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The amount of HST paid to suppliers is debited to the HST Refundable account.
HST RefundableJan. 1 75.00
4 60.008 90.009 30.00
11 135.00
31 105.002 401.35
The HST Refundable account is a contra liability account since it reduces the amount ofa liability. The HST Payable account balance (3 055.93) is reduced by the balance in theHST Refundable account (2 401.35) in order to determine the amount owed to the federalgovernment (654. 58). This amount is remitted to the federal government.
The HST Payable account balance is forwarded to the Receiver General of the federalgovernment monthly, quarterly or annually depending on the size of the business.
Jan. 31 HST Payable 3 055.93HST Refundable 2 401.35Cash 654.58
January HST remitted
In the even the HST paid to suppliers exceeds the HST collected from customers, the busi-ness is able to apply for a refund from the federal government.
92 Copyright © 2008 Pearson Education Canada
Harmonized Sales Tax (HST)
HST PayableJan. 3 201.15
4 91.076 132.329 116.27
10 87.71
31 106.543 055.93
HST RefundableJan. 1 75.00
4 60.008 90.009 30.00
11 135.00
31 105.002 401.35
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93Copyright © 2008 Pearson Education Canada
1. Following are the HST Payable and HST Refundable accounts:
HST Payable HST RefundableAug. 5 157.15 Aug. 4 94
12 194.63 11 12519 187.81 20 10129 201.16 30 130
(a) How much should be remitted to the federal government for the month of August?
(b) In General Journal form, prepare the entry to remit the August tax to the federalgovernment.
2. Record the following source document on page 273 of a General Journal:
Aug. 1 Cash register tape shows sales of $1 120 plus $168 HST.
2 Cheque received from E. Brown for $487 to pay Invoice 675.
2 Cheque received from J. Singh for $267.54 to pay Invoice 687, $273 less$5.46 discount.
4 Cheque received from B. Finch, the owner, for $4 200 as an additionalinvestment in the business.
7 Bank credit memo, $13 800 for a bank loan that was deposited in thecompany bank account.
8 Cheque received from B.L. Schultz for $617.40 to pay Invoice 693, $630less $12.60 discount.
9 Cash Sales Slips 710 to 725 for $2 670 plus $400.50 HST.
3. Record the following source documents on page 214 of a General Journal:
Sep. 10 Cheque received for $5 600 from the owner, J. Gatz, as a further invest-ment in the business.
12 Cash Sales Slips 435 to 450 for $1 325 plus 15-percent HST.
13 Cheques received:From C. Bowman, $457 on account;From P. Lade, $600.74 to pay Invoice 1785 for $613 less $12.26 discount.
15 Cheque received from C. Bowman for $793.80 to pay Invoice 1794 for$810 less $16.20 discount.
15 Cash Sales Slips 451 to 473 for $4 630 plus 15-percent HST.
HST Problems
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94 Copyright © 2008 Pearson Education Canada
HST Solutions
1 (a)
HST Payable $740.75 HST Refundable $450.000 Remittance $290.75
General Journal PAGE
POSTDATE PARTICULARS REF. DEBIT CREDIT
1 (b)
2002
Sep. 15 HST Payable 7 4 0 75
HST Refundable 4 5 0 00
Cash 2 9 0 75
Remitted Aug. HST to the federal government.
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95Copyright © 2008 Pearson Education Canada
HST Solutions
2.
273
2000
Mar. 1 Cash 1 2 8 8 00
Sales 1 1 2 0 00
HST Payable 1 6 8 00
Cash register tape.
2 Cash 4 8 7 00
Accounts Receivable/E. Brown 4 8 7 00
Received from Invoice 675
2 Cash 2 6 7 54
Sales Discount 5 46
Accounts Receivable/J. Singh 2 7 3 00
Received for Invoice 687.
4 Cash 4 2 0 0 00
B. Finch, Capital 4 2 0 0 00
Additional investment.
7 Cash 1 3 8 0 0 00
Bank Loan 1 3 8 0 0 00
Credit memo for loan.
8 Cash 6 1 7 40
Sales Discounts 1 2 60
Accounts Receivable/B.L. Schultz 6 3 0 00
Received for Invoice 693.
9 Cash 3 0 7 0 50
Sales 2 6 7 0 00
HST Payable 4 0 0 50
Cash sales slips 710 to 725.
General Journal PAGE
POSTDATE PARTICULARS REF. DEBIT CREDIT
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96 Copyright © 2008 Pearson Education Canada
3.
214
2001
Sep. 10 Cash 5 6 0 0 00
J. Gatz, Capital 5 6 0 0 00
Additional investment.
12 Cash 1 5 2 3 75
Sales 1 3 2 5 00
HST Payable 1 9 8 75
Cash sales slips 435 to 450.
13 Cash 4 5 7 00
Accounts Receivable/C. Bowman 4 5 7 00
Received on account.
13 Cash 6 0 0 74
Sales Discount 1 2 26
Accounts Receivable/P. Lade 6 1 3 00
Received for Invoice 1785.
15 Cash 7 9 3 80
Sales Discounts 1 6 20
Accounts Receivable/C. Bowman 8 1 0 00
Received for Invoice 1794.
15 Cash 5 3 2 4 50
Sales 4 6 3 0 00
HST Payable 6 9 4 50
Cash sales slips 451 to 473.
General Journal PAGE
POSTDATE PARTICULARS REF. DEBIT CREDIT
HST Solutions
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