218.Subject : - Accounting (a)Your answer is partially correct.Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments andexpenses related to this lease for the years 2024, 2025, and 2026. Kimberly-Clark's fiscal year-end is December 31. (List all debitentries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry isrequired, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.)Date12/31/2412/31/2412/31/2512/31/2512/31/2612/31/26Account Titles and ExplanationRight-of-Use AssetLease Liability(To record the lease)Lease LiabilityCash(To record first lease payment)Amortization ExpenseRight-of-Use Asset(To record amortization of the right-of-use asset)Lease LiabilityInterest ExpenseCash(To record interest expense)Amortization ExpenseRight-of-Use Asset(To record amortization of the right-of-use asset)Lease LiabilityInterest ExpenseCash(To record interest expense)Debit4918476719900] 10 100Credit Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storagebuilding from Blossom Storage Company. The following information pertains to this lease agreement.1.2.3.4.5.The agreement requires equal rental payments of $67,199 beginning on December 31, 2024.The fair value of the building on December 31, 2024, is $491,847.The building has an estimated economic life of 12 years, a guaranteed residual value of $10,500, and an expected residualvalue of $7,400. Kimberly-Clark depreciates similar buildings on the straight-line method.The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor.Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark.Click here to view factor tables.(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

A lease is a contract in which a landlord (the lessor) offers the tenant (the lessee) the right to…

Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Blossom Storage Company. The following information pertains to this lease agreement. 1. 2. 3. 4. 5. The agreement requires equal rental payments of $67,199 beginning on December 31, 2024. The fair value of the building on December 31, 2024, is $491,847. The building has an estimated economic life of 12 years, a guaranteed residual value of $10,500, and an expected residual value of $7,400. Kimberly-Clark depreciates similar buildings on the straight-line method. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark.

Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Blossom Storage Company. The following information pertains to this lease agreement. 1. 2. 3. 4. 5. The agreement requires equal rental payments of $67,199 beginning on December 31, 2024. The fair value of the building on December 31, 2024, is $491,847. The building has an estimated economic life of 12 years, a guaranteed residual value of $10,500, and an expected residual value of $7,400. Kimberly-Clark depreciates similar buildings on the straight-line method. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark.

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

218.

Subject : - Accounting

(a)
Your answer is partially correct.
Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and
expenses related to this lease for the years 2024, 2025, and 2026. Kimberly-Clark's fiscal year-end is December 31. (List all debit
entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.)
Date
12/31/24
12/31/24
12/31/25
12/31/25
12/31/26
12/31/26
Account Titles and Explanation
Right-of-Use Asset
Lease Liability
(To record the lease)
Lease Liability
Cash
(To record first lease payment)
Amortization Expense
Right-of-Use Asset
(To record amortization of the right-of-use asset)
Lease Liability
Interest Expense
Cash
(To record interest expense)
Amortization Expense
Right-of-Use Asset
(To record amortization of the right-of-use asset)
Lease Liability
Interest Expense
Cash
(To record interest expense)
Debit
491847
67199
00] 10 100
Credit

Assume that on December 31, 2024, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage
building from Blossom Storage Company. The following information pertains to this lease agreement.
1.
2.
3.
4.
5.
The agreement requires equal rental payments of $67,199 beginning on December 31, 2024.
The fair value of the building on December 31, 2024, is $491,847.
The building has an estimated economic life of 12 years, a guaranteed residual value of $10,500, and an expected residual
value of $7,400. Kimberly-Clark depreciates similar buildings on the straight-line method.
The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor.
Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark.
Click here to view factor tables.
(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

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