Lesson: 22

Topic: Accounting for the Provincial Sales Tax

Objectives:

Once we have taken up last day's problem, we will then examine the accounting for the Provincial Sales Tax.

The primary focus of this topic is understanding how PST is collected and remitted. In addition, students wil analyze how PST is collected with sales transactions, adjusted for purchases, sales discounts, as well as sales returns and allowances, and remitted to the government.

Method of Instruction and Evaluation:

After a Socratic lecture on the above topics, students will complete exercise #1 on page 181 of the course text.
 

Expectations Addressed:

The "Advanced Accounting Practices" strand of the BAF3M Ministry of Education Curriculum Guidelines outlines all of the following specific expectations. The expectations addressed by this lesson have been highlighted below.

• The Accounting Cycle for a Merchandising Business:

  • describe the principal accounting elements particular to a merchandising business (e.g., new accounts, cost of goods sold section, returns, discounts);

  • identify and describe the periodic and perpetual inventory systems and journalize transactions using both systems;

  • assess the effects that transactions have on the accounts and financial statements of a merchandising business;

  • record transactions in the journals and ledgers of a merchandising business;

  • prepare a trial balance and the financial statements, including a detailed cost of goods sold section, for a merchandising business;

  • record the adjusting and closing entries for a merchandising business (e.g., accruals, inventory adjustment);

  • describe the impact of year-end procedures, including adjusting and closing entries, on the financial statements of a merchandising business;

  • describe alternative accounting practices (e.g., special journals and ledgers).

• Accounting for Sales Tax:

  • describe the accounting practices particular to sales tax (e.g., accounts required, financial statement presentation);

  • record transactions related to provincial sales tax (e.g., collections, remittance);

  • record transactions related to federal sales tax (e.g., collections, remittance).

• Computer Applications in Accounting:

  • use accounting or application software to record transactions for a service business;

  • use accounting or application software to record transactions for a merchandising business;

  • use accounting or application software to prepare financial statements.

References:

Text, chapter #6, topic 6.3, pages 178 - 180.

Handouts: Understanding PST