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All sales are subject to 6% GST and 8% PST.

Damaged merchandise was returned by K. Jim. Credit invoice 34 was issued today for $114 ($6 GST and $8 PST, $100 merchandise)

This is what I did, and I got 0 marks. =(

Debit: Accounts Receivable - K. Jim 114
Debit: Sales Returns and Allowance 100
Credit: GST Payable 6.00
Credit: PST Payable 8.00

Any idea on what it SHOULD look like?

Thanks

2007-06-24 17:04:53 · 2 answers · asked by de4th 4 in Business & Finance Other - Business & Finance

2 answers

Your entries should be:
Dr Sales returns and allowances 100
Dr GST payable 6
Dr PST payable 8
Cr Accounts receivable 114

This way, your debits and credits each total 114. Actually you're merely reversing all the entries you made when you made the sale. The way you answered, your debits totalled 214 and your credits totalled 14. With due respect, Jamie's answer also doesn't total correctly.

2007-06-25 01:12:30 · answer #1 · answered by Sandy 7 · 0 0

Look at your entry - it doesn't balance. This is what it should be:

Credit Accounts Receivable 114
Debit Sales Returns and Allowances 100
Debit GST payable 6
Credit PST payable 8

You debited A/R - that increases it instead of decreasing it. And you credited the payables account - that too increases them instead of decreasing them.

2007-06-24 17:16:10 · answer #2 · answered by jamie5987 4 · 0 0

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