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Twomatic Trucks Ltd is a truck dealer who leases out trucks. During the financial year that ended on 28 February 2023, Twomatic Trucks Ltd leased out a truck to a customer for whom the truck was too expensive to buy.

Twomatic Trucks Ltd is a truck dealer who leases out trucks. During the financial year that ended on 28 February 2023, Twomatic Trucks Ltd leased out a truck to a customer for whom the truck was too expensive to buy.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Twomatic Trucks Ltd is a truck dealer who leases out trucks. During the financial year that ended on 28 February 2023, Twomatic Trucks Ltd leased out a truck to a customer for whom the truck was too expensive to buy. Details regarding the truck: Cash price of the truck (fair value) Cost of the truck to Twomatic Trucks Ltd R 825 000 R 650 000 Details of the finance lease that commenced on 1 March 2022 are as follows: Annual lease payment payable in arrears Lease term Interest rate implicit in the lease R190 900 5 years 9.50% p.a. Unguaranteed residual value R150 025 Initial costs incurred in obtaining and setting R7 000 up the lease paid on 1 March 2022 The market rate of interest is 9.50% p.a. Twomatic Trucks Ltd received the lease payment due on 28 February 2023. REQUIRED: Prepare the general journal entries required in the records of Twomatic Trucks Ltd to account for the lease for the year ended 28 February 2023. Dates are required. Narrations can be ignored. Ignore all taxes. Show all workings. Round off to the nearest Rand.
Transcribed Image Text:Twomatic Trucks Ltd is a truck dealer who leases out trucks. During the financial year that ended on 28 February 2023, Twomatic Trucks Ltd leased out a truck to a customer for whom the truck was too expensive to buy. Details regarding the truck: Cash price of the truck (fair value) Cost of the truck to Twomatic Trucks Ltd R 825 000 R 650 000 Details of the finance lease that commenced on 1 March 2022 are as follows: Annual lease payment payable in arrears Lease term Interest rate implicit in the lease R190 900 5 years 9.50% p.a. Unguaranteed residual value R150 025 Initial costs incurred in obtaining and setting R7 000 up the lease paid on 1 March 2022 The market rate of interest is 9.50% p.a. Twomatic Trucks Ltd received the lease payment due on 28 February 2023. REQUIRED: Prepare the general journal entries required in the records of Twomatic Trucks Ltd to account for the lease for the year ended 28 February 2023. Dates are required. Narrations can be ignored. Ignore all taxes. Show all workings. Round off to the nearest Rand.
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