Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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On 01-Jan-23 Smith Ltd contracted to lease a machine for 4 years.
Annual lease payments (commencing 31-Dec-23) are £40,000. Annual
interest rates are 7.5%.
a)
b)
c)
d)
Required:
Show Smith's lease repayment schedule for this contract.
Show the accounting entries required to record Smith's lease
at the end of the first year.
Amend Smith's balance sheet for 31-Dec-23 (shown below)
to include this lease transaction.
For Y/e 31-Dec-23, calculate Smith's gearing ratios before
and after the addition of the lease transaction.
Smith Ltd SFP at 31-Dec-23
£'000
£'000
NCA
200
ISC
250
Reserves
120
CA
350 Profit/Loss
50
NCL
CL
100
30
Assets
550 Equity & Liabilities
550
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Transcribed Image Text:On 01-Jan-23 Smith Ltd contracted to lease a machine for 4 years. Annual lease payments (commencing 31-Dec-23) are £40,000. Annual interest rates are 7.5%. a) b) c) d) Required: Show Smith's lease repayment schedule for this contract. Show the accounting entries required to record Smith's lease at the end of the first year. Amend Smith's balance sheet for 31-Dec-23 (shown below) to include this lease transaction. For Y/e 31-Dec-23, calculate Smith's gearing ratios before and after the addition of the lease transaction. Smith Ltd SFP at 31-Dec-23 £'000 £'000 NCA 200 ISC 250 Reserves 120 CA 350 Profit/Loss 50 NCL CL 100 30 Assets 550 Equity & Liabilities 550
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