Ethical Principles, Payroll Deductions, and Accounting Entries

Posted on Mar 24, 2025 in Mathematics

Ethical Principles in Business

Diversity, Integrity, Learning, and Safety are crucial. Unethical behavior includes claiming credit for another’s work, falsifying documents, or obstructing another’s academic tasks to gain an unfair advantage.

It also involves disobeying the rules of ethical research or improperly obtaining access to privileged information and disseminating it. To address ethical issues:

  1. Identify the Ethical Issues
  2. Identify the Stakeholders
  3. Identify Alternative Courses of Action
  4. Identify the effects/consequences of each alternative
  5. Make a Decision

The Student Code is derived from fundamental principles of ethics, which underlie the tenets of professional conduct: integrity, objectivity, professional competence, professional behavior, due care, and confidentiality.

Payroll Deductions Explained

Mandatory payroll deductions:

  • Canada Pension Plan (CPP)
  • Employment Insurance (EI)
  • Federal and provincial income taxes

Voluntary payroll deductions:

  • Benefits such as health and pension
  • Union dues
  • Charitable contributions

Accounting Journal Entries Example

Scooby Dog Walking Service – January 2021

Scoobert “Scooby” Doo started Scooby Dog Walking Service on January 1, 2021, in Cartoon, Ontario. Scooby anticipates that his gross revenue will exceed $30,000 this year, hence he became an HST registrant. He decided to charge a $30 flat fee per walk, which includes HST.

Account balances on January 15, 2021, are below:

  • 25-Jan: Received $200 payment for dog walking services from Shaggy Rogers for services performed the previous week on account.
  • 26-Jan: Paid $600 for a six-month insurance policy + HST.
  • 27-Jan: Purchased supplies on account, $250 + HST.
  • 27-Jan: Velma Dinkley gave Scooby a $1000 deposit to ensure her dog was walked four times a day while she was away.
  • 29-Jan: Scooby walked 70 dogs in two weeks; 55 were on account, and 15 were paid in cash.
  • 29-Jan: Scooby paid his little brother Scrappy-Doo for his help walking dogs (10 hours @ $15 per hour). Assume an income tax rate of 25%, CPP 5.45%, EI 1.58%, standard vacation pay.

General Journal Entries

  • 25-Jan: Debit: Cash $200.00; Credit: Accounts Receivable $200.00
  • 26-Jan: Debit: Prepaid Insurance $600.00; Debit: HST Payable $78.00; Credit: Cash $678.00
  • 27-Jan: Debit: Supplies Expense $250.00; Debit: HST Receivable / Payable $32.50; Credit: Accounts Payable $282.50

Debit: Cash $1,000.00
Credit: Unearned Revenue $884.96
Credit: HST Payable $115.04

  • 25-Jan: Debit: Accounts Receivable $1,650.00; Debit: Cash $450.00; Credit: HST Payable $241.59; Credit: Revenue $1,858.41
  • 29-Jan: Debit: Salaries Expense $156.00; Credit: Receiver General Payable – CPP $8.50; Credit: Receiver General Payable – EI $2.46; Credit: Receiver General Payable – Tax $39.00; Credit: Cash = C48-D49-D50-D51

Debit: Salaries Expense – Benefits $11.95; Credit: Receiver General Payable $11.95

Adjusting Entries – January 31

  • 31-Jan: Debit: Salaries Expense $50.39; Credit: CPP $2.55; Credit: EI $1.04; Credit: Accrued Salaries $46.80
  • 31-Jan: Debit: Insurance Expense $100.00; Credit: Prepaid Insurance $100.00
  • 31-Jan: Debit: Supplies Expense $325.00; Credit: Supplies On Hand $325.00
  • 31-Jan: Debit: Bad Debt Expense $180.00; Credit: Allowance for Doubtful Accounts (or AR) $180.00
  • 31-Jan: Debit: Accounts Receivable $150.00; Credit: HST Payable $17.26; Credit: Accrued Revenue $132.74
  • 31-Jan: Debit: Revenue $681.42; Credit: Unearned Revenue $681.42
  • 31-Jan: Debit: Prepaid Advertising $200.00; Credit: Advertising Expense $200.00

February 15th Journal Entries – Payment to Receiver General for HST and Payroll Remittances

  • 15-Feb: Debit: Receiver General – Payroll $199.92; Credit: Cash $199.92
  • 31-Jan: Debit: Receiver General – HST $456.09; Credit: Cash $456.09

Journal Entry Trial Balance – January 31, 2021

Debit: Cash $6,790; Debit: Prepaid Insurance $1,600; Debit: Supplies on Hand $0; Debit: Prepaid Advertising $0; Debit: Accounts Receivable $2,100; Credit: Allowance for Doubtful Accounts $0; Credit: Accounts Payable $600; Credit: HST Payable $875; Credit: Receiver General Payable (Payroll) $138; Credit: Unearned Revenue / Client Deposits $2,000; Credit: Common Shares $1,000; Credit: Training Revenue $8,100; Debit: Insurance Expense $0; Debit: Advertising Expense $0; Debit: Salaries & Benefits Expense $1,673; Debit: Supplies Expense $550

Total Debits: $12,713; Total Credits: $12,713

Bank Reconciliation as of December 31, 2023

Balance per Books: $6,790
Balance per Bank Statement: $4,785

  • Add: deposit in transit: $800
  • Less: Bank Charges: ($52)
  • EFT Payment by K Dutton: ($200)
  • Outstanding Cheques:
    • Cheque #961: ($961)
    • Cheque #392: ($392)
    • Total Outstanding Cheques: ($1,353)

Adjusted Book Balance: $6,938
Adjusted Bank Balance: $6,938

General Journal Entries

  • 16-Jan: Debit: Prepaid Advertising $2,000.00; Debit: HST Payable $260.00; Credit: Cash $2,260.00
  • 22-Jan: Debit: Accounts Receivable $4,000.00; Debit: Cash $2,000.00; Credit: Revenue $5,309.73; Credit: HST Payable $690.27
  • 27-Jan: Debit: Supplies on Hand $1,250.00; Debit: HST Receivable / Payable $162.50; Credit: Accounts Payable $1,412.50
  • 29-Jan: Debit: Salaries Expense $260.00; Credit: Receiver General Payable – CPP $15.47; Credit: Receiver General Payable – EI $4.24; Credit: Receiver General Payable – Tax $65.00; Credit: Cash $175.29

Debit: Salaries Expense – Benefits $21.40; Credit: Receiver General Payable $21.40

Adjusting Journal Entries – January 31

  • 31-Jan: Debit: Advertising Expense $500.00; Credit: Prepaid Advertising $500.00
  • 31-Jan: Debit: Insurance Expense $133.33; Credit: Prepaid Insurance $133.33
  • 31-Jan: Debit: Supplies Expense $1,050.00; Credit: Supplies on Hand $1,050.00
  • 1-Jan: Debit: Revenue $1,061.95; Credit: Unearned Revenue $1,061.95
  • 1-Jan: Debit: Bank Charges $52.00; Debit: Accounts Receivable $200.00; Credit: Cash $148.00