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American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $4.8 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be six years with no residual value. Barton and Barton's implicit interest rate was 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1; FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) ****** Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. Complete this question by entering your answers in the tabs below. Req 1 Year Req 2 Prepare an amortization schedule for the four-year term of the lease. (Enter your answers in whole dollars and not in millions. Round your answers to the nearest whole dollar. Enter all amounts as positive values.) 2021 2022 2023 2024 Total Lease Payments Req 3 and 4 Lease Amortization Schedule 1,646,260 1,646,260 1,646,260 1,646,260 6,585,040 Effective Interest 432,000 322,717 203,598 826,725 1,785,040 Decrease in Balance 1,214,260 1,323,543 1,442,662 819,535 4,800,000 < Req 1 Outstanding Balance 4,800,000 3,585,740 2,262,197 819,535 0 Req 3 and 4 >

American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $4.8 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be six years with no residual value. Barton and Barton's implicit interest rate was 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1; FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) ****** Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. Complete this question by entering your answers in the tabs below. Req 1 Year Req 2 Prepare an amortization schedule for the four-year term of the lease. (Enter your answers in whole dollars and not in millions. Round your answers to the nearest whole dollar. Enter all amounts as positive values.) 2021 2022 2023 2024 Total Lease Payments Req 3 and 4 Lease Amortization Schedule 1,646,260 1,646,260 1,646,260 1,646,260 6,585,040 Effective Interest 432,000 322,717 203,598 826,725 1,785,040 Decrease in Balance 1,214,260 1,323,543 1,442,662 819,535 4,800,000 < Req 1 Outstanding Balance 4,800,000 3,585,740 2,262,197 819,535 0 Req 3 and 4 >

FINANCIAL ACCOUNTING
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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American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $4.8 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be six years with no residual value. Barton and Barton's implicit interest rate was 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1; FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. Complete this question by entering your answers in the tabs below. Req 1 Year Req 2 Prepare an amortization schedule for the four-year term of the lease. (Enter your answers in whole dollars and not in millions. Round your answers to the nearest whole dollar. Enter all amounts as positive values.) 2021 2022 2023 2024 Total Lease Payments Req 3 and 4 Lease Amortization Schedule Decrease in Balance 1,646,260 1,646,260 1,646,260 1,646,260 6,585,040 Effective Interest 432,000 322,717 203,598 826,725 1,785,040 1,214,260 1,323,543 1,442,662 819,535 4,800,000 < Req 1 Outstanding Balance 4,800,000 3,585,740 2,262,197 819,535 0 Req 3 and 4 >
Transcribed Image Text:American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $4.8 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be six years with no residual value. Barton and Barton's implicit interest rate was 9%. (FV of $1, PV of $1, FVA of $1, PVA of $1; FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. Complete this question by entering your answers in the tabs below. Req 1 Year Req 2 Prepare an amortization schedule for the four-year term of the lease. (Enter your answers in whole dollars and not in millions. Round your answers to the nearest whole dollar. Enter all amounts as positive values.) 2021 2022 2023 2024 Total Lease Payments Req 3 and 4 Lease Amortization Schedule Decrease in Balance 1,646,260 1,646,260 1,646,260 1,646,260 6,585,040 Effective Interest 432,000 322,717 203,598 826,725 1,785,040 1,214,260 1,323,543 1,442,662 819,535 4,800,000 < Req 1 Outstanding Balance 4,800,000 3,585,740 2,262,197 819,535 0 Req 3 and 4 >
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