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Unit # 15 – Sales Taxes. Unit # 15 – Sales Taxes. What are Sales Taxes? We all know that there are 2 things guaranteed in in life: Death Taxes In Ontario we Used to “record” two types of taxes Provincial Sales Tax (PST) Goods & Services Sales Tax (GST). Unit # 15 – Sales Taxes.
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Unit # 15 – Sales Taxes • What are Sales Taxes? • We all know that there are 2 things guaranteed in in life: • Death • Taxes • In Ontario we Used to “record” two types of taxes • Provincial Sales Tax (PST) • Goods & Services Sales Tax (GST)
Unit # 15 – Sales Taxes • Now we only record 1 type: HST • HST is calculated at 13% of the ticket price. • Note: The “Ticket Price” is the price that is shown on the merchandise.
Unit # 15 – Sales Taxes • Contra Accounts revisited • Recall that Contra Accounts are accounts that are “married” to each other but act Contrary to each other. • To record transactions with Sales Taxes, you will require your 2nd Contra Account (Drawings was your first)
Unit # 15 – Sales Taxes • HST Recoverable (or Receiveable) is “married” to HST Payable • Together they determine how much money you owe the government.
Unit # 15 – Sales Taxes • HST Payable is a Liability Accounts. • This is because the business owner collects the money from the sale, but has to give it to the Government (owes it to the Government). • Therefore, HST Recoverable (or Receivable) is a Contra-Liability account!
Unit # 15 – Sales Taxes • Entering Sales Tax transactions into the General Journal. • Remember! • HST Payableonly when selling • HST Recoverableonly when buying
Unit # 15 – Sales Taxes Buying Example #1 • HST Example: Dec. 1 - Bought supplies for $1000 plus HST. • Note: This is same for any Asset or Expense Account Dec. 1 Supplies 120 1000 HST Recoverable 206 130 Cash 100 1130
Unit # 15 – Sales TaxesSelling Example # 1 • HST Example: Dec. 1 – Sold $1000 + HST worth of pictures.
Unit # 15 – Sales TaxesRemitting the Tax • HST: This a little trickier. Total up the HST Payable & HST Recoverable Accounts
Unit # 15 – Sales TaxesRemitting the Tax • If the HST Payable account is larger then the HST Recoverable, send the difference to Ottawa.
Unit # 15 – Sales TaxesRemitting the Tax • If the HST Recoverable is larger than HST Payable then expect a Cheque from Ottawa (using Accounts Receivable)
