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 $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 four years with no residual value. Barton and Barton's implicit interest rate was 9%. 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) 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 Year Prepare an amortization schedule for the four-year term of the lease. Note: Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to the nearest whole dollar. 2024 2025 2026 2027 Req 2 Lease Payments Req 3 and 4 Lease Amortization Schedule Decrease in Balance Effective Interest Outstanding Balance 4,800,000
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 $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 four years with no residual value. Barton and Barton's implicit interest rate was 9%. 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) 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 Year Prepare an amortization schedule for the four-year term of the lease. Note: Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to the nearest whole dollar. 2024 2025 2026 2027 Req 2 Lease Payments Req 3 and 4 Lease Amortization Schedule Decrease in Balance Effective Interest Outstanding Balance 4,800,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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 $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
four years with no residual value. Barton and Barton's implicit interest rate was 9%.
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)
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
Year
Prepare an amortization schedule for the four-year term of the lease.
Note: Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to the nearest whole
dollar.
2024
2025
2026
2027
Total
Req 2
Lease
Payments
Req 3 and 4
0
Lease Amortization Schedule
Decrease in
Balance
Effective
Interest
0
<
0
Req 1
Outstanding
Balance
4,800,000
Req 3 and 4
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F70dabe61-0fe7-42ab-bbbe-26eb7a4bc637%2Fde6e537f-c060-41a6-a503-8cd02be469e6%2Fuqcr5xv_processed.jpeg&w=3840&q=75)
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 $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
four years with no residual value. Barton and Barton's implicit interest rate was 9%.
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)
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
Year
Prepare an amortization schedule for the four-year term of the lease.
Note: Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to the nearest whole
dollar.
2024
2025
2026
2027
Total
Req 2
Lease
Payments
Req 3 and 4
0
Lease Amortization Schedule
Decrease in
Balance
Effective
Interest
0
<
0
Req 1
Outstanding
Balance
4,800,000
Req 3 and 4
>
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
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.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education