Mr. Bourgase: BAT4M: Financial Statements Review

HST Payable/Recoverable

The Harmonized Sales Tax (HST) is a value added tax that took effect in Ontario in July 2010 replacing the federal Goods and Services Tax (GST) and the Provincial Sales Tax (PST).
Businesses charge and collect HST on sales of goods and services. They also pay HST when they purchase goods and services needed to operate their business. Each month, businesses remit the difference between the HST collected (payable) and the HST paid (recoverable) to the government.
A business has two accounts to record HST transactions: (1) HST Recoverable. This is a contra-liability account where businesses record the HST they paid. This will be deducted from the HST Payable at the time the business makes a remittance to the government. (2) HST Payable. This is a current liability account where the business records the HST it has charged its customers. This is a liability because the business owes the HST collected to the government.
H.S.T. in Ontario is 13%. Read problems carefully to determine if the 13% was included in the amount listed or not.

Last class, we reviewed the Accounting Cycle.
Terms to know: Source Documents, General Journal and General Ledger
We looked at the General Journal entries and did the practice exercise for Ken's Barber Shop (Solutions - students are at different stages of the activity - don't look at the solutions until you have finished).
This information can be found in the textbook on pages 98 to 109.

We will review balance sheets and income statements.
This information can be found in the textbook on pages 62 to 65.
Terms to know: Current Assets and Current Liabilities, Fixed Assets and Long-Term Liabilities, Revenue, Expenses, Contra-Asset and Contra-Liability accounts.
Exercise: Based on the Trial Balance for R. Brown Accounting, create an Income Statement and a Balance Sheet in M.S. Excel.