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Hi Dea Tutor, I have some questions.
Example(plum) in opentuition in lease chapter. On the video lecture, you just showed double entries for lessee accounting but coming to lessor accounting will it be in the below?
debit receivable–22730
credit asset—22730interest income
debit receuvable-887
credit interest income-887cash
debit cash-5000
credit receivable-5000usually if the lease at the start of the year it is double entries for cash is different from double entries from lease at the end of the year because in this case it is recorded below
lease at the end of the year it looks like cash is divided into two parts.
debit cash-5000
credit lease receivable-4113
credit interest income-887Use a regular amortised cost working.
Payment in arrears : B/F + FC – CASH = C/F
Payment in arrears ; B/F – CASH + FC = C/F
FC : Dr Receivable Cr P&L
Cash: Dr Cash Cr Receivablewill its debit or credit entries be the same when it is in advance or in arrears payment?
when it is in advance we write debit and credit
debit receivable-887
credit finance income-887debit cash-5000
credit receivable-5000when it is arrears then
debit cash-5000
credit receivable-4113
credit finance income-887lessee side in arrears
debit lease liability-4113
debit interest cost-887
credit cash-5000in arrears method we usually deduct finance cost or income from cash but in advance it is not the same i mean I can not give the double entry for the in advabnce method in the below
lessee side in arrears
debit lease liability-4113
debit interest cost-887
credit cash-5000lessor side in arrears
debit cash-5000
credit receivable-4113
credit finance income-887If payments are in advance the cash journal comes before the finance cost journal.
Remember that you should not use journals in the exam to explain concepts – you have to use sentences.
Dear Tutor, for calculation of the in advance and in arrears there is no problem.
In arrears
there is a chance of dividing cash into interest income and receivable from lessor side likewise interest expense and lease liabillity from lessee side example
when it is arrears then
debit cash-5000
credit receivable-4113
credit finance income-887lessee side in arrears
debit lease liability-4113
debit interest cost-887
credit cash-5000in advance method you can not do that i think.
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