Problem
DEF Company sells hockey equipment. They use a perpetual inventory system. The company is located in Ontario with an HST rate of 13%. The following transactions took place in August 2022.
August 10 Purchased 500 pairs of skates ( on account ) for $50,000 ( plus HST ) from
Skates Inc.
16 Sold $20,000 worth of skates ( plus HST ) to MLSE for cash.
22 Returned $1,000 worth of skates ( from the August 10 purchase ) to
Skates Inc. ( they were defective ).
Task
Prepare the necessary journal entries to record the above transactions.