Source Documents

Source Documents

Source Documents Presentations by You. Taxes In Ontario, we pay 13% on each purchase we make. (This 13% is called the HST) If we purchase $200 pair of jeans, the tax will be $200 x 0.13 = $26

Total price of the jeans is therefore $226 The HST Until a couple of years ago, we paid two taxes. The 8% provincial sales tax (PST) and the 7% goods and services tax (GST). For some products we paid one, and for other products we paid both.

Now all taxable products pay the HST (Harmonized Sales Tax) of 13%. Tutoring and tuition fees, residential rents, basic groceries, municipal public transit, child care, music lessons and prescription drugs are

exempt from the HST. How does the government get that money? Most of the HST a company pays on purchases is recoverable. eg. A company purchases a horse for $1000. There is HST of $130. The company will get this HST back from

the government. Most of the HST a company collects on its sales is payable. eg. It then sells the horse for $2000 plus tax. (The total bill is for $2260) The company will owe the tax they collected to the government. HST Payable

HST Recoverable HST Payable* 260 -130 130 *This is the amount you will remit to the government. (Unless the balance is recoverable then you will receive money

from the government.) What would the journal entry be, if we purchased $100 worth of supplies at Staples? What would the journal entry be if we sold $400 worth of services for cash?

What will our ledger look like? As s et s Cas h Liabil it ies & Ow n er 's Eq u it y Su ppl ies Fees ear n ed HST REc o ver abl e

hs t payabl e J . Ser gean t , Capit al Remitting the HST We need to get the payable amount to 0. We need to get the recoverable amount to 0. The amount left over will be the amount

we receive or remit.(To or from our Bank account.) HST Rec o ver abl e HST payabl e Note: Accounting for the HST

The Harmonized Sales Tax (HST) was introduced in Ontario on July 1, 2010 The balance of tax owed is remitted to the government on regular intervals. Businesses collect taxes when they make sales and pay taxes when they make purchases. It is accounted for as follows: Cash 226-HST Payable Revenue

HST Rec o ver abl e 26-200-- Supplies HST Recoverable Cash 100-13--

HST Payable Cash HST Recoverable 26-- HST payabl e 13-13--

Homework Using journal paper, complete the Red Lake Camground case handout involving HST. Using journal paper, journalize the transactions, calculating HST, for only October 19 on page 193. Also: Calculate the HST remittance or refund and perform this journal entry on October 31.

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