Account titles and Explanation Debit Credit ______________________________ _____

Question

Account titles and Explanation                          Debit                    Credit

______________________________           ___________ _____________

______________________________         ____________ _____________

_______________________________      _____________ ____________

(to record the sales)

_______________________________        ____________    _______________

_______________________________      ____________    ________________

( To record the leaseback)

_______________________________     ____________    _________________

_______________________________    ____________    _________________

( to record depreciation)

_____________________________       ______________ ________________

____________________________     _____________    ____________________

( to record amortization of profit on sale)

______________________________     _____________   _______________

_____________________________      ____________    _____________   

__________________________          ____________   _________________

( to record first lease payment)

Explanation / Answer

Accounts Debit Credit cash    33,000 Truck    28,000 Deferred Gain on Sale lease back      5,000 (Sale of asset) Lease Truck    32,999 Lease Payable    32,999 3.79078*8705 PVAF = 5 yrs 10% = 3.79078 (Lease back) Lease payable      8,705 cash      8,705 (payment of lease) Depreciation 6600 Accumulated Depreciation      6,600 record Depreciation Deferred gain 1000 Depreciation 1000 Amortisation of profit on sale

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