On January 1, 2018, Burlington Inc.'s general ledger contained these opening balances for its liability accounts — Employee income tax payable 700

On January 1, 2018, Burlington Inc.'s general ledger contained these opening balances for its liability accounts:

Accounts payable..................................$52,000

CPP payable..............................................3,810

EI payable.................................................1,598

Sales tax payable.....................................18,000

Employee income tax payable..................7,700

Unearned revenue...................................16,000

The following selected transactions occurred during the month.

Jan. 5 Sold inventory for cash totalling $20,000, plus 5% GST and 7% PST. The cost of goods sold was $14,000. Burlington uses a perpetual inventory system.

13 Paid $18,000 ($7,500 GST to the Receiver General and $10,500 PST to the provincial Minister of Finance) for sales taxes collected in December.

14 Paid $13,108 to the Receiver General for amounts owing from the December payroll for the employee payroll deductions of $10,271 (CPP $1,905, EI $666, and employee income tax $7,700) and employee benefits of $2,837 (CPP $1,905 and EI $932).

15 Borrowed $18,000 from HSBC Bank for three months; 6% interest is payable monthly on the 15th of each month.

19 Provided services for customers who had made advance payments of $11,200. This amount includes applicable GST and PST, which is not payable until the related revenue is earned.

22 Paid $32,000 to trade creditors on account.

28 Received assessment of property taxes of $4,200 for the calendar year. They are payable on March 1.

29 Paid employees for the month. Gross salaries totalled $40,000 and payroll deductions included CPP of $1,980, EI of $752, and employee income tax of $9,474. Employee benefits included CPP of $1,980 and EI of $1,053.

Instructions

(a) Record the above transactions.

(b) Record any required adjusting entries at January 31.

(c) Prepare the current liabilities section of the statement of financial position at January 31.

SOLUTION

(a) Jan. 5 Cash 22,400

Sales 20,000

Sales Tax Payable [($20,000 × 5%);

+ ($20,000 × 7%)] 2,400

Cost of Goods Sold 14,000

Inventory 14,000

13 Sales Tax Payable  7,500

Cash 7,500

13 Sales Tax Payable  10,500

Cash 10,500

14 CPP Payable ($1,905 + $1,905)  3,810

EI Payable ($666 + $932) 1,598

Employee Income Tax Payable 7,700

Cash 13,108