Question

Mist (pty) Ltd is a company with a reporting period of 30 june. Currently the company's accountant is preparing the financial statements for the year ending 30 june 2019. Mist (pty) Ltd operates from a building it is leasing from a property developer. Mist (Pty) Ltd occupied the building on 1 july 2016 and pays monthly rental. The monthly rentals as from 1 july 2017 are R14 000 and there is an 10% annual increase .the lease agreement is for 4 years.

Question.

1. Provide necessary journal entries for the reporting of 30 june 2019.

Answer 1

the amount of rent per month:

taking into account the 10% growth of the annual

 necessary journal entries:

attribution of the monthly rental amount to expenses:

Debit expense account credit lessor's account

Payment for rent:

Debit lessor's account credit current account