Chapter 6 Test Review

Terms:

1. Bank credit memo (advice)

A bank document informing the business of an increase made in the business’s bank account

2

2. Cash receipts daily summary

Lists money coming in from customers paying on account 16

3. Clearing an account balance

Making an account balance 017

4. Harmonized Sales Tax (HST)

A combination of provincial and federal taxes 5

5. Opening entry

First entry made when a new business is starting 15

6. Purchase invoice

Source document for a purchase on account

19

7. Sales invoice

Source document for sales on account 20

8. Credit The right side of an account 23

9. Bank debit memo (advice)

A bank document informing the business of a decrease made in the business ‘s bank account

1

10. Cash sales slip

A business form showing the details of a transaction in which goods or services are sold to a customer for cash

4

11. Compound entry

A transaction that affects more than two accounts 10

12. Journal A book in which the accounting entries for all transactions are first recorded 3

13. Point of sale (POS) terminal

An electronic device cash register used to process sales at retail locations 13

14. Remittance A payment being made to a creditor or the government 6

15. Sales tax An additional charge added to sales payable to the government 12

16. Contra account

Account in a ledger that reduces the value of a related account e.g. HST Recoverable is contra (a subtraction from) to HST Payable

11

17. Book of original

Refers to the accounting journal in which business transactions are initially

18

2

entry recorded—General Journal18. Cheque

copyA source document supporting the accounting entry for a payment by cheque

8

19. Goods and Services Tax (GST)

Tax that’s added to most goods and services sold for domestic consumption—revenue for the federal government

21

20. Journal entry

A record of accounts affected by a transaction

7

21. Provincial Sales Tax (PST)

A tax charged on sales that needs to be collected from customers and sent to the provincial government

9

22. Remittance advice

The tear-off section of a cheque explaining what the cheque is for 24

23. Debit The left side of an account 22

24. Source documents

Evidence that a transaction has occurred—e.g. cash sales slip, sales invoice, purchase invoice, cheque copy

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1. A bank document informing the business of a decrease made in the business ‘s bank account

2. A bank document informing the business of an increase made in the business’s bank account

3. A book in which the accounting entries for all transactions are first recorded

4. A business form showing the details of a transaction in which goods or services are sold to a customer for cash

5. A combination of provincial and federal taxes

6. A payment being made to a creditor or the government

7. A record of accounts affected by a transaction

8. A source document supporting the accounting entry for a payment by cheque

9. A tax charged on sales that needs to be collected from customers and sent to the provincial government

10. A transaction that affects more than two accounts

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11. Account in a ledger that reduces the value of a related account e.g. HST Recoverable is contra (a subtraction from) to HST Payable

12. An additional charge added to sales payable to the government

13. An electronic device cash register used to process sales at retail locations

14. Evidence that a transaction has occurred—e.g. cash sales slip, sales invoice, purchase invoice, cheque copy

15. First entry made when a new business is starting

16. Lists money coming in from customers paying on account

17. Making an account balance 0

18. Refers to the accounting journal in which business transactions are initially recorded—General Journal

19. Source document for a purchase on account

20. Source document for sales on account

21. Tax that’s added to most goods and services sold for domestic consumption—revenue for the federal government

22. The left side of an account

23. The right side of an account

24. The tear-off section of a cheque explaining what the cheque is for

Name the type of transaction for each source document:

Cash sales slip Cash sale—Bank DR

Purchase Invoice Purchase on account—A/P CR

Cash receipts daily summary Received on account from customers

Bank credit memo Cash added to your bank account e.g. interest earned

Sales Invoice Sale on account—A/R DR

4

Cheque Copy Paid Cash—Bank CR

Bank debit memo Cash taken out of your bank account e.g. Bank Service Charge

25. Decide if the company has to send the government a cheque (remittance) or if the government will send them a cheque (refund) and calculate the amount.

End of HST Recoverable

HST Payabl

e

Amount of Remittance

Refund Claimed

PeriodOct. 31 1025.96 988.36   37.60 31-May 5514.23 9633.54 4119.31   Nov. 30 215.63 664.25 448.62   

Dean Hemiston paid $492, including 13% HST, for some equipment.A. Calculate the price of the equipment before the sales tax was added. Show your work.

492/1.13=$435.40

B. Calculate the sales tax on the goods. Show your work.492-435.90=56.60

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Create an opening entry for a new business.

Jack Whitcombe and Sons is a consultant engineering firm. The accounts for the firm are as follows.

Bank HST Recoverable Car ExpenseA/R—various HST Payable Office ExpenseSupplies J. Whitcombe, Capital Rent ExpenseOffice Equipment J. Whitcombe, Drawings Wages ExpenseAutomobile Fees EarnedA/P—various Bank Charges

Journalize the following transactions, using the general journal page below. The rate for HST is 13%. Calculate and add the HST on all sales and purchase transactions. Do not provide explanations. The next page number of the journal is 16.

Transactions

Oct. 2 Cash Sales SlipNo. 102 to S. Stewart, $102.50 plus taxes.

6 Sales InvoiceNo. 617 to Jack Morrison, $250.90 plus taxes.

10 Cheque CopyNo. 910 to Industrial Suppliers, $500 on account.

12 Cash ReceiptFrom Jack Mahoney, $322.50 on account.

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18Purchase InvoiceFrom Grand’s Stationers, $60.50 for office supplies plus HST of 7.87, total $68.37.

20 Cheque CopyNo. 911 to Jack Whitcombe, $525 for personal use.

24 Bank Debit Memo$31.90 for bank service charge.

30 Cheque CopyNo. 912 to W. Moss, $900 for part-time wages.

31 Cash Sales SlipNo. 103 to J. Beck, $450 plus taxes.

31 Cheque CopyThe balances in the HST accounts for the previous period were: HST Recoverable $770 and HST Payable $1820. Cheque 913 was written to the Receiver General for $1050 to clear the accounts for that period.

HST Payable 1820

HST Recoverable 770

Bank 1050

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