Accounting Question Answer 2022

Running head: ACCOUNTING
Accounting
Name of the Student:
Name of the University:
Authors Note:

1
Answer 4:
Part (a):
Lease schedule
Leased asset Machine
Lessor Busby Ltd.
Lessee Duncan Ltd.
Lease term 4 years
Lease period started 01-Jul-18
Initial payment of lease on July 01, 2018 100,000.00
Annual lease payment 100,000.00
Lease payment is due at the beginning of each year Jul-01
Guaranteed residual payment 20,000.00
Residual value of the equipment 30,000.00
Useful life of the asset 6 years
Implicit rate of interest 7%
Part (b):

2
Journal entries in the books of Duncan Ltd.
Date Account titles and
explanations
Debit
Amount ($)
Credit amount
($)
01-
Jul-18
Machinery 377,690.00
Busby Ltd 377,690.00
(Being the machineiry taken on lease from Busby Ltd)
01-
Jul-18
Busby Ltd 100,000.00
Bank 100,000.00
(Being the lease payment made)
30-
06-19
Finance charge 19,438.30
Busby Ltd 19,438.30
(Being finance charges recorded)
30-
06-19
Profit and loss account 19,438.30