11. On January 1 , 2021 , Santee Company leased equipment , with a fair value of $ 25,771 ( cost of $ 20,000 ) , to Bellimoso Company under a 3-year lease. The economic life of the asset is 4 years . The present value of the lease payments equals $ 25,771 and $ 10,000 in annual lease payments are due at the end od each year of the lease. An implied rate of 8 % is assumed . When Bellimoso makes the first lease payment on December 31 , 2021 , what entry will the lessee record? A,B, C, or D
11. On January 1 , 2021 , Santee Company leased equipment , with a fair value of $ 25,771 ( cost of $ 20,000 ) , to Bellimoso Company under a 3-year lease. The economic life of the asset is 4 years . The present value of the lease payments equals $ 25,771 and $ 10,000 in annual lease payments are due at the end od each year of the lease. An implied rate of 8 % is assumed . When Bellimoso makes the first lease payment on December 31 , 2021 , what entry will the lessee record? A,B, C, or D
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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11. On January 1 , 2021 , Santee Company leased equipment , with a fair value of $ 25,771 ( cost of $ 20,000 ) , to Bellimoso Company under a 3-year lease. The economic life of the asset is 4 years . The present value of the lease payments equals $ 25,771 and $ 10,000 in annual lease payments are due at the end od each year of the lease. An implied rate of 8 % is assumed . When Bellimoso makes the first lease payment on December 31 , 2021 , what entry will the lessee record? A,B, C, or D
Transcribed Image Text:OA
OB.
OC.
D.
Lease liability
Cash
Lease liability
Interest expense
Cash
Lease liability
Interest expense
Cash
Lease liability
Interest payable
Cash
Debit
10,000
Debit
7,938
2,062
Debit
9,200
800
Debit
10,000
Credit
10,000
Credit
10,000
Credit
10,000
Credit
2,862
7.138
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