Appendix 5A

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University of Toronto Scarborough
Financial Accounting
Liang Chen

Appendix 5A Sales tax Sales Taxes collected on receipts The GST is a 7% personal consumption tax that is collected on most goods and services provided in Canada There are GST exemptions that does not require to be taxed PST is a single-stage tax collected from final consumers on goods and services There are few exemptions GST and PST are excluded from the sales account as it is only collected to be remitted The general entry would be: CashA.R debited, Sales Credited, GSTPST Payable Sales returns and allowance If merchandise is returned, the general entry would be: Sales returns and allowances debited, GSTPST payable debited, and CashA.R credited Sales taxes paid on disbursements Businesses pay GST on their purchases, but are able to recover the GST. Consequently, when merchandise is purchased, the GST paid by a business is not part of the inventory cost The GS
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