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Expenses Exactly Equal The Presumed Expenses of The Quick Method Expenses Booked Without Sales Tax Included

The document outlines financial transactions related to expenses and income using both the Quick Method and Normal Method for accounting. It details supplier invoices, billing for services, and the resulting income statements and balance sheets, highlighting differences in net income and remittance amounts. The analysis shows how expenses booked with and without sales tax affect the overall financial outcome, emphasizing the benefits of the Quick Method under certain conditions.

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Kernel King
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39 views10 pages

Expenses Exactly Equal The Presumed Expenses of The Quick Method Expenses Booked Without Sales Tax Included

The document outlines financial transactions related to expenses and income using both the Quick Method and Normal Method for accounting. It details supplier invoices, billing for services, and the resulting income statements and balance sheets, highlighting differences in net income and remittance amounts. The analysis shows how expenses booked with and without sales tax affect the overall financial outcome, emphasizing the benefits of the Quick Method under certain conditions.

Uploaded by

Kernel King
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Expenses exactly equal the Presumed Expenses of the Quick Method

Expenses booked without sales tax included

Supplier invoice Billing for your services

Store #2 Stuff $ 2,000 Project xyz- My time $ 16,277


Junk $ 3,000 Materials $ 5,000
$ 5,000 $ 21,277

Sales tax at 13% $ 650 Sales tax at 13% $ 2,766

Account Due $ 5,650 Account Due $ 24,043


e Quick Method

Income Statement

Revenues $ 21,277

Expenses $ 5,000

Net Income $ 16,277

Balance Sheet - before tax remitted Remittance


Normal Method
ASSETS LIABILITIES Collected $ 2,766
Acct Rec- Cust $ 24,043 Due to supplier $ 5,650 less Paid $ 650
HST recoverable $ 650 HST payable $ 2,766 Remit $ 2,116

EQUITY Quick Method


Net Income $ 16,277 Sales $ 21,277
13% tax $ 2,766
Total $ 24,693 Total $ 24,693 Billed $ 24,043
8.8%
Remit $ 2,116
Actual Expenses Lower than the Presumed Expenses of the Quick Meth

Expenses booked without sales tax included

Transactions Balance Sheet - before tax remitted


13% Invoice
Cost HST Total ASSETS
Acct Rec- Cust $ 24,043
Billings 21,277 2,766 24,043 HST recoverable $ 260
Expense 2,000 260 2,260
Net Income 19,277

Total $ 24,303
enses of the Quick Method

without sales tax included

- before tax remitted Remittance Journal Entries - No


Normal Method
LIABILITIES Collected $ 2,766 cr
Due to supplier $ 2,260 less Paid $ 260 dr
HST payable $ 2,766 Remit $ 2,506 cr
###
EQUITY Quick Method
Net Income $ 19,277 Sales $ 21,277
13% tax $ 2,766
Total $ 24,303 Billed $ 24,043
8.8%
Remit $ 2,116 Journal Entries - Q

Difference $ 390 cr
dr
cr
cr

Remittance Journal Entries - Q


Normal Method Quick Method
Collected $ 2,766 cr
less Paid $ 260 dr
Remit $ 2,506 cr

Quick Method
Sales $ 21,277
13% tax $ 2,766
Billed $ 24,043
8.8%
Remit $ 2,116
Journal Entries - No
Normal Method
cr
dr
cr
Expenses booked without sales tax included

Journal Entries - Normal method Income Stmt - Normal method

Remittance Due $ -2,506 Billings $ 21,277


HST payable $ 2,766
HST recoverable $ -260 Expenses $ 2,000
$0
Net Income $ 19,277

Income Stmt - Quick method


Journal Entries - Quick method
Revenues
Remittance Due $ -2,116 Billings $ 21,277
HST payable $ 2,766 Other $ 390
HST recoverable $ -260 $ 21,667
Other Income $ -390 Expenses $ 2,000
$0
Net Income $ 19,667

Expenses booked including sales tax

Income Stmt - Quick method

Journal Entries - Quick method Revenues


Quick Method Billings $ 21,277
Remittance Due $ -2,116 Other $ 650
HST payable $ 2,766 $ 21,927
Other Income $ -650 Expenses $ 2,260
$0
Net Income $ 19,667

Income Stmt - Normal method


Journal Entries - Normal method Revenues
Normal Method Billings $ 21,277
Remittance Due $ -2,506 Other $ 260
HST payable $ 2,766 $ 21,537
Other Income $ -260 Expenses $ 2,260
$0
Net Income $ 19,277
Other Remittance Expenses Correct
Income Normal Quick w/o Tax incl Tax Net Income

$ 0 n/a n/a P $ 19,017


$ 0 P P $ 19,277
$ 260 P P $ 19,277
$ 390 P P $ 19,667
$ 650 P P $ 19,667

$ 260
$ 390

$ 650
Sales tax on actual expenses
Difference in remittance : Normal vs Quick
= 19,667 vs 19,277 Net Income
Maximum possible benefit from Quick method when $0 expenses
= 21,277 billings * 23.5% presumed expense * 13% sales tax rate
= tax paid on presumed expenses of Quick method
= 2,766 tax collected less 2,116 remitted Quick method
= 260 + 390

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