41.On February 10, 2017, after issuance of its financial statements for calendar 2016, Diogenes Corp. entered into a financing agreement with Gigantic Bank, allowing Diogenes Corp. to borrow up to $6,000,000 at any time through 2019. Amounts borrowed under the agreement bear interest at 2% above the bank's prime interest rate and mature two years from the date of the loan. Diogenes presently has $2,250,000 of notes payable with Provincial Bank maturing March 15, 2018. The company intends to borrow $3,750,000 under the agreement with Gigantic and pay off the notes payable to Provincial. The agreement with Gigantic also requires Diogenes to maintain a working capital level of $9,000,000 and prohibits the payment of dividends on common shares without prior approval by Gigantic. From the above information only, the total short-term debt of Diogenes Corp. on the December 31, 2016statement of financial position is
42.On December 31, 2017, Street Ltd. has $2,000,000 in short-term notes payable due on February 14, 2018. On January 10, 2018, Street arranged a line of credit with Regal Bank, which allows Street to borrow up to $1,500,000 at 1% above the prime rate for three years. On February 2, 2018, Street borrowed $1,200,000 from Regal Bank and used $500,000 additional cash to liquidate $1,700,000 of the short-term notes payable. Assuming Street adheres to IFRS, the amount of the short-term notes payable that should be reported as current liabilities on Street’s December 31, 2017statement of financial position (to be issued on March 5, 2018) is
43.Ye Olde Shoppe operates in a province with a 6% PST. The store must also collect 5% GST on all sales. For the month of May, Ye Olde Shoppe sold $90,000 worth of goods to customers, 60% of which were cash sales and the balance being on account. Based on the above information, what is the total debit to accounts receivable for the month of May?
44.Zircon Ltd., a GST registrant, buys $4,500 worth of Office Supplies for their own use. The purchase is subject to 8% PST and 5% GST. What amount will be debited to the Office Supplies account as a result of this transaction?
45. At December 31, 2017, Manganese Corp.’s records show the following balances, all of which are normal: PST Payable, $625; GST Payable, $600; GST Receivable, $488. In January 2018, Manganese pays the Federal Government the net amount owing regarding GST owing from December. The journal entry to record this payment will include a
a) debit to GST Payable of $112.
b) credit to Cash of $600.
c) credit to GST Payable of $600.
d) credit to GST Receivable of $488.
46. Aluminum Ltd. has made a total of $23,250 in instalments for corporate income tax for calendar 2017, all of which have been debited to Current Income Tax Expense. At year end, Dec 31, 2017, the accountant has calculated that the corporation’s actual tax liability is only $21,500. What is the correct adjusting entry to reflect this fact?
a) Dr. Current Income Tax Expense $1,750, Cr. Income Taxes Payable $1,750
b) Dr. Income Taxes Payable, $1,750, Cr. Current Income Tax Expense $1,750
c) Dr. Income Taxes Receivable $1,750, Cr. Current Income Tax Expense $1,750
d) Dr. Current Income Tax Expense $21,500, Cr. Income Taxes Payable $21,500
47. Included in Harrison Inc.’s account balances at December 31, 2017, were the following:
4% note payable issued October 1, 2017,
maturing September 30, 2018$250,000
6% note payable issued April 1, 2017, payable in six equal
annual instalments of $100,000 beginning April 1, 2018600,000
Harrison’s December 31, 2017 financial statements were to be issued on March 31, 2018. On January 15, 2018, the entire $600,000 balance of the 6% note was refinanced by issuance of a long-term note to be repaid in 2018. In addition, on March 10, 2018, Harrison made arrangements to refinance the 4% note on a long-term basis. Under IFRS, on the December 31, 2017 statement of financial position, the amount of the notes payable that Harrison should classify as current liabilities is
48. On September 1, 2017, Coffee Ltd. issued a $1,800,000, 12% note to Humungous Bank, payable in three equal annual principal payments of $600,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2018. At December 31, 2018, Coffee should record accrued interest payable of
49. Jordan Corp. operates in Ontario, selling a variety of goods. For most of these goods, Jordan must charge 13% HST, for some they only have to charge 5% HST; while a very few are tax exempt. During June of this year, the company reported sales of $200,000, on which 70% were charged 13% HST, 25% were charged only 5% HST, and the rest were tax exempt sales. The total amount of HST collected in June was
50. The total payroll of Carbon Company for the month of October was $240,000, all subject to CPP deductions of 4.95% and EI deductions of 1.83%. As well, $60,000 in federal income taxes and $6,000 of union dues were withheld. The employer matches the employee deductions and contributes 1.4 times the employee EI deductions. What amount should Carbon record as employer payroll tax expense for October?
Use the following information for questions 51–52.
Silver Ltd. has 35 employees who work 8-hour days and are paid hourly. On January 1, 2017, the company began a program of granting its employees 10 days paid vacation each year. Vacation days earned in 2017may be taken starting on January 1, 2018. Information relative to these employees is as follows:
HourlyVacation Days EarnedVacation Days Used
YearWagesby Each Employeeby Each Employee
Silver has chosen to accrue the liability for compensated absences (vacation pay) at the current rates of pay in effect when the vacation pay is earned.