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# MGT401 Assignment # 2

Dated: Jan 26, 16
Important announcement
Assignment # 02
Financial accounting II (MGT401)

Dear Students!
This is to inform that Assignment No. 2 will be opened on January 27, 2016 and due date of assignment submission will be February 02, 2016.

A 24 hours extra/grace period after the due date is usually available to overcome uploading difficulties which may be faced by the students on last date. This extra time should only be used to meet the emergencies; and above mentioned due date should always be treated as final to avoid any inconvenience.

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### Replies to This Discussion

1....
july 11

lease asset                                             728200
to lease liability                              728200

recording of lease asset and obligation

june 2012

interest a/c                                     50974

accrued interest account             50974

recording of interest expense

june 2012

accrued interest account             50974

lease liability   a/c                 164026

bank a/c                         215000

payment of lease installment

june 2012

depreciation                       109230

to accumulated depreciation        109230

workings

present value of MLP   = Installment   ( 1- (1+r)n

r

=   215000 (1- (1+0.07)-4)

0.07

= 728200

lease asset and lease liability should be the value lower of fair value or present value of MLP   ......both are same

depreciation     = 15% of cost(728200)

interest for the first year    =      7% of  lease liability   (728200)

upload to correct solution

koi help ni kr raha???

I have uploaded solution my dear, plz find my attachment in my comment

Guys here is Assignment 2 Solution
best of luck dears

Attachments:

hy Yousaf Shahzad Ansari  is it a correct solution???

hi,

yes Amna it is

thnx yousaf...

my pleasure

SOLUTION:

Part A

Lease amortization schedule

Rate 7% per annum

 Years Lease Rental Financial Charges Principal Amount Outstanding Principal Rs.728,200 1 215,000 50,974 164,026 564,174 2 215,000 39,492 175,508 388,666 3 215,000 27,207 187,793 200,873 4 215,000 14,127 200,873 - Total 860,000 131,800 728,200

Part B

General Entries

 Date Description Debit Credit 01-07-11 Factory to equipment subject to finance lease A/C Liability subject to Finance Lease A/C Recording asset at the acceptation of lease July 1,2011 728,200 728,200 01-07-11 Liability subject to Finance Lease A/C Current maturity of lease A/C Transfer to current maturity at the inception of lease 164,026 164,026 30-06-12 Current maturity of Lease A/C       Financial charges A/C    Bank  charges                  Payment of first lease rental 164,026 50,974 175,508 Liability subject to Finance Lease A/C Current maturity of lease A/C Transfer to current maturity at the inception of lease June 30, 2011 175,508 175,508 30-06-12 Depreciation Expense A/C Accumulated Depreciation A/C      Depreciation      June 30,2012 109,230 109,230

Part C

Profit and Loss for the year June30, 2012.

Depreciation A/C 728,200x 15%               109,230

Lease Financial Charges                                            50,974

Profit and Loss for the year June 30, 2013.

Depreciation A/C    728,200-109,230 x 15%                                 92, 845
Lease Financial Charges                                        39, 492

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