American Food Services, Incorporated leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2024 The lease agreement for the $5.1 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 11% Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2024 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, 2024 and 2026
American Food Services, Incorporated leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2024 The lease agreement for the $5.1 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 11% Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2024 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, 2024 and 2026
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:American Food Services, Incorporated leased a packaging machine from Barton and Barton Corporation. Barton and Barton
completed construction of the machine on January 1, 2024 The lease agreement for the $5.1 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 11%
Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Required:
1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2024
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, 2024 and 2026
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req 3 and 4
Prepare the appropriate entries related to the lease on December 31, 2024 and 2026.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in
whole dollars and not in millions. Round your intermediate and final answers to the nearest whole dollar.
ง
View transaction list
View journal entry worksheet
No
Date
General Journal
December 31,
2024
Interest expense
Lease payable
Cash
1
N
2
December 31,
2024
Interest expense
Lease payable
Cash
3
December 31,
2026
Interest expense
Lease payable
Cash
December 31,
2026
Depreciation expense
Equipment
Debit
Credit
561,000
1.082,862
1,643,862
309,668
1.334,194
1,643,862
< Req 2
Req 3 and 4
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