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8.3 Settling the firm’s GST account

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VCE Accounting - Michael Allison
VCE Accounting - Michael Allison

VCE Accounting Unit 3. Video of this presentation can be found on my YouTube channel here https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg.

Education
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8.3 SETTLING THE FIRM’S GST ACCOUNT
© Michael Allison. Author’s permission required for external use.  At the end of a period a firm can have either a:  GST Clearing Asset or…  A GST Clearing Liability… 8.3 SETTLING THE FIRM’S GST ACCOUNT GST Clearing [L] 31 Jan Cash 300 31 Jan Cash 700 31 Jan Creditors control 500 31 Jan Debtors control 400 31 Jan Balance 300 1100 1100 1 Feb Balance 300 GST Clearing [L] 31 Jan Cash 1000 31 Jan Cash 600 31 Jan Creditors control 400 31 Jan Debtors control 300 31 Jan Balance 500 1400 1400 1 Feb Balance 500
© Michael Allison. Author’s permission required for external use.  The firm must now settle its account by either:  Receiving cash from the government if it has a GST Clearing Asset  Pay cash to the government if it has a GST Clearing Liability Business Government Cash Receipts Journal Cash Payments Journal Business Government 8.3 SETTLING THE FIRM’S GST ACCOUNT
© Michael Allison. Author’s permission required for external use.  Example: a firm had the following GST Clearing account…  On February 23 the firm received $500 from the government to settle the firm’s account. GST Clearing [L] 31 Jan Cash 1000 31 Jan Cash 600 31 Jan Creditors control 400 31 Jan Debtors control 300 31 Jan Balance 500 1400 1400 1 Feb Balance 500 Business Government $500 8.3 SETTLING THE FIRM’S GST ACCOUNT
© Michael Allison. Author’s permission required for external use. GST Clearing [L] 31 Jan Cash 1000 31 Jan Cash 600 31 Jan Creditors control 400 31 Jan Debtors control 300 31 Jan Balance 500 1400 1400 1 Feb Balance 500 28 Feb Cash 500 Cash [A] 28 Feb GST Clearing 500  On February 23 the firm received $500 from the government to settle the firm’s account. Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 GST Clearing [L] 31 Jan Cash 1000 31 Jan Cash 600 31 Jan Creditors control 400 31 Jan Debtors control 300 31 Jan Balance 500 1400 1400 1 Feb Balance 500 28 Feb Cash 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash [A] 28 Feb GST Clearing 500 8.3 SETTLING THE FIRM’S GST ACCOUNT Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500
© Michael Allison. Author’s permission required for external use.  Example: a firm had the following GST Clearing account…  On February 17 the firm paid $300 to the government to settle the firm’s account. GST Clearing [L] 31 Jan Cash 300 31 Jan Cash 700 31 Jan Creditors control 500 31 Jan Debtors control 400 31 Jan Balance 300 1100 1100 1 Feb Balance 300 Business Government $300 8.3 SETTLING THE FIRM’S GST ACCOUNT
© Michael Allison. Author’s permission required for external use. GST Clearing [L] 31 Jan Cash 300 31 Jan Cash 700 31 Jan Creditors control 500 31 Jan Debtors control 400 31 Jan Balance 300 1100 1100 28 Feb Cash 300 1 Feb Balance 300  On February 17 the firm paid $300 to the government to settle the firm’s account. Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash [A] 28 Feb GST Clearing 500 28 Feb GST clearing 300 8.3 SETTLING THE FIRM’S GST ACCOUNT Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash [A] 28 Feb GST Clearing 500 28 Feb GST clearing 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 GST Clearing [L] 31 Jan Cash 300 31 Jan Cash 700 31 Jan Creditors control 500 31 Jan Debtors control 400 31 Jan Balance 300 1100 1100 28 Feb Cash 300 1 Feb Balance 300
© Michael Allison. Author’s permission required for external use. TASK In-class Homework Ex8.8 X Case study X

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8.3 Settling the firm’s GST account

  • 2. © Michael Allison. Author’s permission required for external use.  At the end of a period a firm can have either a:  GST Clearing Asset or…  A GST Clearing Liability… 8.3 SETTLING THE FIRM’S GST ACCOUNT GST Clearing [L] 31 Jan Cash 300 31 Jan Cash 700 31 Jan Creditors control 500 31 Jan Debtors control 400 31 Jan Balance 300 1100 1100 1 Feb Balance 300 GST Clearing [L] 31 Jan Cash 1000 31 Jan Cash 600 31 Jan Creditors control 400 31 Jan Debtors control 300 31 Jan Balance 500 1400 1400 1 Feb Balance 500
  • 3. © Michael Allison. Author’s permission required for external use.  The firm must now settle its account by either:  Receiving cash from the government if it has a GST Clearing Asset  Pay cash to the government if it has a GST Clearing Liability Business Government Cash Receipts Journal Cash Payments Journal Business Government 8.3 SETTLING THE FIRM’S GST ACCOUNT
  • 4. © Michael Allison. Author’s permission required for external use.  Example: a firm had the following GST Clearing account…  On February 23 the firm received $500 from the government to settle the firm’s account. GST Clearing [L] 31 Jan Cash 1000 31 Jan Cash 600 31 Jan Creditors control 400 31 Jan Debtors control 300 31 Jan Balance 500 1400 1400 1 Feb Balance 500 Business Government $500 8.3 SETTLING THE FIRM’S GST ACCOUNT
  • 5. © Michael Allison. Author’s permission required for external use. GST Clearing [L] 31 Jan Cash 1000 31 Jan Cash 600 31 Jan Creditors control 400 31 Jan Debtors control 300 31 Jan Balance 500 1400 1400 1 Feb Balance 500 28 Feb Cash 500 Cash [A] 28 Feb GST Clearing 500  On February 23 the firm received $500 from the government to settle the firm’s account. Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 GST Clearing [L] 31 Jan Cash 1000 31 Jan Cash 600 31 Jan Creditors control 400 31 Jan Debtors control 300 31 Jan Balance 500 1400 1400 1 Feb Balance 500 28 Feb Cash 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash [A] 28 Feb GST Clearing 500 8.3 SETTLING THE FIRM’S GST ACCOUNT Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500 Cash Receipts Journal Date Details Receipt Number Bank Discount Expense Debtors Control Cost of Sales Sales Sundries GST Feb 23 GST clearing B/S 500 500
  • 6. © Michael Allison. Author’s permission required for external use.  Example: a firm had the following GST Clearing account…  On February 17 the firm paid $300 to the government to settle the firm’s account. GST Clearing [L] 31 Jan Cash 300 31 Jan Cash 700 31 Jan Creditors control 500 31 Jan Debtors control 400 31 Jan Balance 300 1100 1100 1 Feb Balance 300 Business Government $300 8.3 SETTLING THE FIRM’S GST ACCOUNT
  • 7. © Michael Allison. Author’s permission required for external use. GST Clearing [L] 31 Jan Cash 300 31 Jan Cash 700 31 Jan Creditors control 500 31 Jan Debtors control 400 31 Jan Balance 300 1100 1100 28 Feb Cash 300 1 Feb Balance 300  On February 17 the firm paid $300 to the government to settle the firm’s account. Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash [A] 28 Feb GST Clearing 500 28 Feb GST clearing 300 8.3 SETTLING THE FIRM’S GST ACCOUNT Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 Cash [A] 28 Feb GST Clearing 500 28 Feb GST clearing 300 Cash Payments Journal Date Details Cheque Number Bank Discount Revenue Creditors Control Stock Control Wages Sundries GST Feb 17 GST clearing B/S 300 300 GST Clearing [L] 31 Jan Cash 300 31 Jan Cash 700 31 Jan Creditors control 500 31 Jan Debtors control 400 31 Jan Balance 300 1100 1100 28 Feb Cash 300 1 Feb Balance 300
  • 8. © Michael Allison. Author’s permission required for external use. TASK In-class Homework Ex8.8 X Case study X