Accounting Question Answer 2022

Accounting assignment

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

3
Finance charge 19,438.30
(Being finance charges charged to profit and loss account)
30-
06-19
Depreciation 57,948.33
Machinery 57,948.33
(Being depreciation charged)
30-
06-19
Profit and loss account 57,948.33
Deprceiation 57,948.33
(Being deprciation charges transferred to profit and loss
account)
01-
07-19
Finance charge 100,000.00
Bank 100,000.00
(Being the lease payment made)

4
30-
06-20
Finance charge 13,798.98
Finance charge 13,798.98
(Being finance charges recorded)
30-
06-20
Profit and loss account 13,798.98
Finance charge 13,798.98
(Being finance charges charged to profit and loss account)
30-
06-20
Depreciation 57,948.33
Machinery 57,948.33
(Being depreciation charged)
30-
06-20
Profit and loss account 57,948.33
Depreciation 57,948.33
(Being depreciation charges transferred to profit and loss
account)

5
Part (c):
Income statement extract of Busby Ltd for the year ended on 30th June 2020
Lease revenue Amount ($)
Interest 13,798.98
Answer 5:
Part (a):
Journal entries
Date Account titles and explanations Debit ($) Credit ($)
Normal weeks Salaries and wages (2000 x 3) 6,000.00
Bank 6,00
0.00
Profit and loss account 6,000.00
Salaries and wages (2000 x 3) 6,00
0.00
Leave weeks Salaries and wages (2350 x 3) 7,050.00

6
Bank 7,05
0.00
Profit and loss account 7,050.00
Salaries and wages (2350 x 3) 7,05
0.00
Part (b):
Journal entries
Date Account titles and explanations Debit ($) Credit ($)
Salaries and wages (2350 x 1) 2,35
0.00
Bank 2,35
0.00
Profit and loss account 2,35
0.00
Salaries and wages (2350 x 1) 2,35
0.00

7
Answer 6:
Part A:
AASB116 – Property, Plant and Equipment
Property, plant and equipment increase is debited to the account with equivalent credit to cash or
bank in case the property, plant and equipment has been purchased in cash. However, in case the
purchase is on credit then equivalent amount shall be credited against the vendor account. In case
the value of the asset increases due to revaluation then the increase in value is debited to the
property, plant and equipment account and the equivalent amount is credited revaluation reserve
account. Thus, the following journal entries will be recorded to record the increase in value of
the asset.
Journal entries
Date Account titles and explanations Debit ($) Credit
($)
Property, plant and equipment 10,000
.00
Bank / Vendor 10,000
.00
(Asset purchased)
Property, plant and equipment 20,000
.00

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Revaluation reserve 20,000
.00
(Increase in value of asset without any purchase)
In case the value of the asset decrease due to revaluation then the decrease in value is credited to
the property, plant and equipment account and the equivalent amount is debited against the
revaluation reserve account (if already there from earlier revaluation profit) or debited against
the profit and loss account in case there is no revaluation reserve balance. Thus, the following
journal entries will be recorded to record the increase in value of the asset.
Journal entries
Dat
e
Account titles and
explanations
Debit ($) Credit ($)
Revaluation reserve 10,000.
00
Property, plant and equipment 10,000.
00
(asset value decreases and there is revaluation reserve
balance)
Property and loss account 10,000.

9
00
Property, plant and equipment 10,000.
00
(asset value decreases and there is revaluation reserve
balance)
Part B:
Research and development expenditure is debited directly expensed in the profit and loss account
in the period when the expenditure is incurred. However, in case the research and developed
expenditure incurred expected to ensure income accruing to the organization over the future for
more than a year then appropriate amount is capitalized in the financial statement.
(a) AAB102 – Inventory
References: