1. Provide the journal entries required on the lessee's books through January 1, 2020. 1/1/2020 journal entries for acquiring the lease asset: Account Dr. Account Cr. 1/1/2020 journal entries for the first payment: Account Dr. Account Cr.
Lessor CBA, Inc. leased a machine to lessee DF Co. The lease is noncancelable and requires DF to pay $6,000 per year, payable in advance, over a four-year period. CBA’s implicit interest rate (known to DF) is 6 percent. The lease term begins on January 1, 2020. The machine’s economic life is 7 years. The machine's book value is $26,000 and fair value $30,000, with a guaranteed residual value of $10,000. The collectability of the lease payments is probable for the lessor.
(Note: Present value of an ordinary annuity of 1 for 4 periods at 6% is 3.46511, of an annuity due of 1 for 4 periods at 6% is 3.67301. Present value of 1 for 4 periods at 6% is 0.79209).
Notes: Read carefully and follow strictly so that Bb can grade you correctly!
1. Use comma in numbers, one thousand is 1,000, not 1000. No $ sign. No positive or negative sign.
2. If no entry is required, write N/A.
3. Only use the following accounts: ROU asset, Lease liability, Depreciation expense, Interest expense, Cash, CGS, Lease receivable, Inventory, Sales revenue, Interest revenue.
4. Copy account names accurately to receive credits, names are not case sensitive.
1. Provide the
1/1/2020 journal entries for acquiring the lease asset:
Account Dr.
Account Cr.
1/1/2020 journal entries for the first payment:
Account Dr.
Account Cr.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
