Question

On 20 June Yin repaired Yan's computer and charged her $690 cash including GST of 15%. The general journal entry to record the transaction for Yin is:

Select one:
a. Debit Cash $600, and Debit GST Collected $90, Credit Income from Repairs $690.
b. Debit Cash $690, Credit GST Paid $90 and Credit Income from Repairs $600
c. Debit Cash $690, Credit Income from Repairs $690
d. Debit Cash $690, Credit GST Collected $90 and Credit Income from Repairs $600.

Answer 1

The correct general journal entry to record Yin's transaction is to debit Cash $690, credit Income from Repairs $600, and credit GST Collected $90 (option D). This aligns with the sales amount and the separate collection of GST.

Step-by-step explanation:

The correct journal entry to record the transaction where Yin repaired Yan's computer and charged her $690, which includes GST of 15%, is to account for the sales amount (excluding GST), and the GST collected separately (option D). The entry would be as follows:

• Debit Cash $690 (the total amount received)
• Credit Income from Repairs $600 (the income excluding GST)
• Credit GST Collected $90 (the GST amount at 15% of $600)

This entry reflects that Yin has received cash and has an obligation to remit the GST to the tax authorities, and recognizes the income earned from the repair service.