12 Exercise 15-33 (Algo) Nonlease payments; lessor and lessee [LO15-2, 15-7] eBook Print ferences On January 1, 2024, NRC Credit Corporation leased equipment to Brand Services under a finance/sales- type lease designed to earn NRC a 11% rate of return for providing long-term financing. The lease agreement specified the following: 1. Ten annual payments of $58,000 beginning January 1, 2024, the beginning of the lease and each December 31 thereafter through 2032. 2. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $336,658. 3. The lease qualifies as a finance lease/sales-type lease. 4. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $6,500 per year are specified, beginning January 1, 2024. NRC was to pay this cost as incurred, but lease payments reflect this expenditure. 5. A partial amortization schedule, appropriate for both the lessee and lessor, follows: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Effective Interest (11% Decrease in Outstanding Payments x Outstanding balance) Balance Balance 336,658 1/1/2024 51,500 51,500 285,158 12/31/2024 51,500 0.11(285,158) = 31,367 12/31/2025 51,500 0.11(265,025) = 29,153 Required: 20,133 265,025 22,347 242,678 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2024 and December 31, 2024. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2024 and December 31, 2024. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate entries for the lessor related to the lease on January 1, 2024 and December 31, 2024. Note: Round your intermediate and final answers to the nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet

12 Exercise 15-33 (Algo) Nonlease payments; lessor and lessee [LO15-2, 15-7] eBook Print ferences On January 1, 2024, NRC Credit Corporation leased equipment to Brand Services under a finance/sales- type lease designed to earn NRC a 11% rate of return for providing long-term financing. The lease agreement specified the following: 1. Ten annual payments of $58,000 beginning January 1, 2024, the beginning of the lease and each December 31 thereafter through 2032. 2. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $336,658. 3. The lease qualifies as a finance lease/sales-type lease. 4. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $6,500 per year are specified, beginning January 1, 2024. NRC was to pay this cost as incurred, but lease payments reflect this expenditure. 5. A partial amortization schedule, appropriate for both the lessee and lessor, follows: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Effective Interest (11% Decrease in Outstanding Payments x Outstanding balance) Balance Balance 336,658 1/1/2024 51,500 51,500 285,158 12/31/2024 51,500 0.11(285,158) = 31,367 12/31/2025 51,500 0.11(265,025) = 29,153 Required: 20,133 265,025 22,347 242,678 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2024 and December 31, 2024. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2024 and December 31, 2024. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate entries for the lessor related to the lease on January 1, 2024 and December 31, 2024. Note: Round your intermediate and final answers to the nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Transcribed Image Text:12 Exercise 15-33 (Algo) Nonlease payments; lessor and lessee [LO15-2, 15-7] eBook Print ferences On January 1, 2024, NRC Credit Corporation leased equipment to Brand Services under a finance/sales- type lease designed to earn NRC a 11% rate of return for providing long-term financing. The lease agreement specified the following: 1. Ten annual payments of $58,000 beginning January 1, 2024, the beginning of the lease and each December 31 thereafter through 2032. 2. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $336,658. 3. The lease qualifies as a finance lease/sales-type lease. 4. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $6,500 per year are specified, beginning January 1, 2024. NRC was to pay this cost as incurred, but lease payments reflect this expenditure. 5. A partial amortization schedule, appropriate for both the lessee and lessor, follows: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Effective Interest (11% Decrease in Outstanding Payments x Outstanding balance) Balance Balance 336,658 1/1/2024 51,500 51,500 285,158 12/31/2024 51,500 0.11(285,158) = 31,367 12/31/2025 51,500 0.11(265,025) = 29,153 Required: 20,133 265,025 22,347 242,678 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2024 and December 31, 2024. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2024 and December 31, 2024. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate entries for the lessor related to the lease on January 1, 2024 and December 31, 2024. Note: Round your intermediate and final answers to the nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet

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