Chen Wholesalers Ltd. incurred the following transactions related to current lia

Question

Chen Wholesalers Ltd. incurred the following transactions related to current liabilities: 1. Chen's cash register showed the following totals at the end of the day on March 17: pre-tax sales $51,000; GST $2,550; and PST $3,570 2. Chen received its property tax bill for the calendar year for $48,600 on May 1, payable July 1 3. Chen's gross payroll for the week of August 15 was $78,200. The company deducted $3,770 for CPP, $1,470 for EI, $6,600 for pension, and $16,230 for income tax from the employees' pay. The employer portions of CPP and EI for the week were $3,770 and $2,058 respectively. 4. On August 22, all amounts owing for employee income taxes, CPP, and EI pertaining to the payroll in transaction 3 above were paid. 5. On October 1, Chen borrowed $70,000 from First Bank for a six-month period; 4% interest on, the bank loan spayable on Apri .

Explanation / Answer

Part 1 - Journal Entries

Part 2 - Adjusting Entries

Part 3 - Settlement of Loan

Date Accounts Title and Explanation Debit Credit March 17 Cash $57120 Sales $51000 Gst Payable $2550 Pst Payable $3570 (To record the sales) May 1 Property Tax Expenses $48600 Property Tax Payable $48600 (Record of expenses on account) July 1 Property Tax Payable $48600 Cash $48600 (Property tax paid) August 15 Salary Expenses $78200 Salary Payable $50130 CPP Payable $3770 EI Payable $1470 Pension Payable $6600 Income Tax withheld $16230 (Salary Recorded) August 15 Payroll Tax Expenses $5828 CPP payable $3770 EI payable $2058 (Employer part of tax payable) August 22 CPP Payable $7540 EI Payable $3528 Pension Payable $6600 Cash $17668 (Being Payroll taxes paid) October 1 Cash $70000 First Bank Loan $70000 (Loan Taken)

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