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 $4.2 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 four 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 Req 2 Req 3 and 4 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.) Lease Amortization Schedule Year Lease Payments Effective Interest 2021 2022 2023 2024 Total 0 0 Decrease in Balance Outstanding Balance < Req 1 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 $4.2 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 four 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 Req 2 Req 3 and 4 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.) Lease Amortization Schedule Year Lease Payments Effective Interest 2021 2022 2023 2024 Total 0 0 Decrease in Balance Outstanding Balance < Req 1 Req 3 and 4 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $4.2 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 four 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
Req 2
Req 3 and 4
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.)
Lease Amortization Schedule
Year
Lease
Payments
Effective
Interest
2021
2022
2023
2024
Total
0
0
Decrease in
Balance
Outstanding
Balance
< Req 1
Req 3 and 4 >
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