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March 29, 2024, 09:14:31 am

Author Topic: Balance sheet question HELP  (Read 1274 times)  Share 

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Vanessabate1

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Balance sheet question HELP
« on: November 01, 2019, 04:08:50 pm »
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Can someone please explain the treatment of GST clearing, why is it listed as a current asset and not a current liability?
And the values for both loans??

My teacher is hopeless, I have emailed him for help but he hasn't responded - he showed up for probably 60% of our classes and I'm still waiting for ALL my unit 4 SAC results, so frustrating

Thankyou in advance!

Seamus Wong

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Re: Balance sheet question HELP
« Reply #1 on: November 01, 2019, 04:30:06 pm »
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Can someone please explain the treatment of GST clearing, why is it listed as a current asset and not a current liability?
And the values for both loans??

My teacher is hopeless, I have emailed him for help but he hasn't responded - he showed up for probably 60% of our classes and I'm still waiting for ALL my unit 4 SAC results, so frustrating

Thankyou in advance!

The firm paid more in GST than they received, hence the debit balance. Generally speaking, when a business is started, they will buy a bunch of assets and pay for a bunch of shit, and they won't make any (or will make very few) sales. So there is usually always a debit balance for GST

cotangent

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Re: Balance sheet question HELP
« Reply #2 on: November 01, 2019, 04:30:49 pm »
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Since, the business is just starting, the GST Clearing is treated as a current asset since we are paying GST rather than collecting it on behalf of the ATO (as there aren't any sales being made or anything for us to collect gst). When we pay more GST than collecting, it is a current asset because the ATO now owes us the amount we paid.


The loan amonut from GEN1 Bank is repaid 2000 per month. So 2000 x 12 = 24000 would be paid within a year. Thus, that would be the amonut recorded as the current liability.


The loan amount from Offistuff is used to buy shop fittings and its worth 25000 plus gst. So we need 27500 (incl gst) as the amount for the loan we receive (since we need money to pay for the gst as well). But, we are also paying a deposit and since we pay it, we wont need a loan amount for that. Thus, u do 27500-5000 = 22500
2019: Accounting [45]
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