Answered: a Leasing Company signs an agreement on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

(a)

Correct answer icon

Your answer is correct.

Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)

SHAMROCK COMPANY (Lessee) Lease Amortization Schedule
Date	Annual Lease Payment	Interest on Liability	Reduction of Lease Liability	Lease Liability
1/1/20	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount	$enter a dollar amount
1/1/20	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
1/1/21	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
1/1/22	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
	$enter a total amount for this column	$enter a total amount for this column	$enter a total amount for this column

eTextbook and Media

List of Accounts

Attempts: 1 of 3 used

(b)

Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)

Date

Account Titles and Explanation

Debit

Credit

choose a transaction date

enter an account title To record the lease

enter a debit amount

enter a credit amount

enter an account title To record the lease

enter a debit amount

enter a credit amount

(To record the lease)

choose a transaction date

enter an account title To record lease payment

enter a debit amount

enter a credit amount

enter an account title To record lease payment

enter a debit amount

enter a credit amount

(To record lease payment)

choose a transaction date

enter an account title To record interest expense

enter a debit amount

enter a credit amount

enter an account title To record interest expense

enter a debit amount

enter a credit amount

(To record interest expense)

choose a transaction date

enter an account title To record amortization of the right-of-use asset

enter a debit amount

enter a credit amount

enter an account title To record amortization of the right-of-use asset

enter a debit amount

enter a credit amount

(To record amortization of the right-of-use asset)

choose a transaction date

enter an account title To reverse interest expense

enter a debit amount

enter a credit amount

enter an account title To reverse interest expense

enter a debit amount

enter a credit amount

(To reverse interest expense)

choose a transaction date

enter an account title To record lease payment

enter a debit amount

enter a credit amount

enter an account title To record lease payment

enter a debit amount

enter a credit amount

enter an account title To record lease payment

enter a debit amount

enter a credit amount

(To record lease payment)

choose a transaction date

enter an account title To record interest expense

enter a debit amount

enter a credit amount

enter an account title To record interest expense

enter a debit amount

enter a credit amount

(To record interest expense)

choose a transaction date

enter an account title To record amortization of the right-of-use asset

enter a debit amount

enter a credit amount

enter an account title To record amortization of the right-of-use asset

enter a debit amount

enter a credit amount

(To record amortization of the right-of-use asset)

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

1.		The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years.
2.		The fair value of the asset at January 1, 2020, is $59,000.
3.		The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $4,000, none of which is guaranteed.
4.		The agreement requires equal annual rental payments of $19,211 to the lessor, beginning on January 1, 2020.
5.		The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee.
6.		Shamrock uses the straight-line depreciation method for all equipment.