BBB Leasing purchased a machine for $400,000 and leased it to Jack Tupp Auto Repair on January 1, 2021. Lease description: Quarterly rental payments Lease term No residual value; no BPO Economic life of machine Implicit interest rate Fair value of asset $24,506 at beginning of each period 5 years (20 quarters) 5 years 98 $400,000 What is the balance in the lease payable account after the April 1, 2021, lease payment?

BBB Leasing purchased a machine for $400,000 and leased it to Jack Tupp Auto Repair on January 1, 2021. Lease description: Quarterly rental payments Lease term No residual value; no BPO Economic life of machine Implicit interest rate Fair value of asset $24,506 at beginning of each period 5 years (20 quarters) 5 years 98 $400,000 What is the balance in the lease payable account after the April 1, 2021, lease payment?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: BBB Leasing purchased a machine for $280,000 and leased it to Jack Tupp Auto Repair on January 2021.…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Prepare the lease payments schedule for the Moose Ltd. Prepare the journal entries in the books of…

A: A lease is a contractual agreement between a lessor (owner) and a lessee (user) granting the lessee…

Q: On January 1, 2024, National Insulation Corporation (NIC) leased equipment from United Leasing under…

A: Finance lease refers to a contract made between lessor and lessee that allows to use the asset and…

Q: On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under…

A: Since you have specifically asked for part 4 and 6, we are solving the same for you.

Q: On 1 July 2010 A Ltd entered into a leasing arrangement with B Ltd. The lease agreement included the…

A: Amount of depreciation = (Value of asset-Residual value)/Useful life of the asset

Q: At the beginning of the current year, Lessee Company leased a new machine from Lessor Company with…

A: First we need to compute Initial recognition of lease liability on commencement date = present…

Q: Prepare the entry to record the lease. (Credit account titles are automatically indented when amount…

A: The lease shall refer to a contract or an arrangement wherein a right of control on an asset is…

Q: Elf Leasing purchased a machine for $510,000 and leased it to IGA, Incorporated on January 1, 2024.…

A: A lessee is a person, or maybe a company who signs the lease agreement with a lessor to use the…

Q: The details of the equipment lease agreement that Taj Corp. (lessee) recently entered into with…

A: Taj Corp - Lessee has entered into a lease agreement with Stanger leasing - Lessor for an equipment…

Q: On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease.…

A: Meaning of Lease: Leases are contracts in which the property/asset owner allows another party to use…

Q: On December 31, 2019, Oriole Company leased machinery from Terminator Corporation for an agreed upon…

A: As per the accounting standard, A lease means where an asset owner gives his asset custody to some…

Q: Randy Industries leased equipment to Lilly Company on January 1, 2024. Randy recorded the lease as…

A: Lease refers to a contract or agreement between two parties, in which one party agrees to transfer…

Q: Kaan Co. signed a 4-year non-cancellable lease agreement for a machine on January 1, 2021. The lease…

A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: Scape Corp. manufactures hi-tech equipment. Scape leased equipment to User, Inc., on January 1,…

A: Year PV factor @ 8% Remarks 0 1.00000 1 0.89286 = 1 / 1.12 2 0.79719 = 0.89286 /…

Q: Sandhill Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The…

A: The method that businesses employ to record the financial impact of their leases is known as lease…

Q: On June 1, 2024, First National leased a building. The lease agreement calls for First National to…

A: Lease: It implies to a contract where by one party (lessor) agrees to grant the right of using an…

Q: On January 1, 2024, National Insulation Corporation (NIC) leased equipment from United Leasing under…

A: The lease term is the total number of years for which the lease agreement is in effect. In this…

Q: Question 3: Briefly answer the below questions in general (without referring to the detailed numbers…

A: A) Total assets and total liabilities are lower than if the operating lease had been classified as…

Q: On August 31, 2021, Prince Corp. made the annual lease payment of $63,000 for its office building.…

A: Lease expense paid for 12 months On 31 March, we have to book amortize the prepaid expenses for 7…

Q: Edison Leasing leased high-tech electronic equipment to Manufacturers Southern on January 1, 2024.…

A: A lease schedule is part of a master lease agreement. Although it may include other details such as…

Q: Company A leases equipment from Company B in a finance lease. Lease payments of $3,226 are due…

A: The right-to-use asset is the amount that is recorded by the lessee in its balance sheet that…

Q: The Metro Company (lessee) leased equipment from Denver Industries on January 1, 2021. Denver…

Q: On January 1, 2024, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease.…

A: The present value of upcoming lease payments that a business is obligated to make in accordance with…

Q: On January 1, 2025, Carla Vista Company leased equipment to Sandhill Corporation. The following…

A: Finance leases can be of two types, namely with selling profit and without selling profit. There may…

Q: Technold Incorporated sells computer systems. Technoid leases computers to Lone Star Company on…

A: A lease is defined as a contractual agreement incorporated between two business entities where one…

Q: On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease.…

A: Lease is a contract between lessee and lessor, where lessor gives his assets to lessee for use in…

Q: On January 1, 2024, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease.…

A: Step 1:1. The lease liability after the first payment is $278,504, which is the outstanding balance…

Q: Eastern Edison Company leased equipment from Low-Tech Leasing on January 1, 2018. Low-Tech recently…

A: INTRODUCTION: A journal entry is frequently made in the main ledger, it can also be made in a…

Q: Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2011.…

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

BBB Leasing purchased a machine for $400,000 and leased it to Jack Tupp Auto Repair on January 1, 2021.
Lease description:
Quarterly rental payments
Lease term
No residual value; no BPO
Economic life of machine
Implicit interest rate
Fair value of asset
$24,506 at beginning of each period
5 years (20 quarters)
5 years
98
$400,000
What is the balance in the lease payable account after the April 1, 2021, lease payment?

Multiple Choice
$375,494.
$519,493.
$359,437
$391,551.

Expert Solution

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!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define lease

VIEW

Step 2: Calculation showing the interest included in the lease payment made on April 1, 2021:

VIEW

Step 3: Calculation showing the balance in lease payable account after April 1, 2021 lease payment:

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

(J)
Saved Help Seve & On January 1, 2021, Obermax Corporation agreed to lease a piece of equipment to a customer for 10 years. The lease qualified as a finance/sales-type lease with a 6% implicit interest rate. The customer agreed to make a payment of $8,000 at the beginning of each year, the first payment being made on January 1, 2021. The journal entry Obermax should recognize at the inception of the lease includes: Multiple Choice a debit to lease receivable of $80,000. a debit to lease receivable of S62,414. a credit to interest revenue of $3,265. a debit to lease receivable of $58.881.
Prepare a lease amortization schedule for Larkspur for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) LARKSPUR LEASING COMPANY (Lessor) Lease Amortization Schedule Date 5/1/20 5/1/20 5/1/21 5/1/22 5/1/23 5/1/24 4/30/25 Annual Lease Payment Plus BPO $ 14 15852.19 15852.19 15852.19 15852.19 15852.19 5000 63409 Interest on Lease Receivable 5736.26 i 4623.51 3388.35 2017.33 495,50 13748 LA Recovery of Lease Receivable 15852.19 10115.93 11228.68 12463.84 13834.86 4504.50 49661 OF
5. Moose purchased a machine for $420,000 and leased it to Acme on January 1, 2021. Lease description: Quarterly rental payments $25,184 at beginning of each period Lease term 5 years (20 quarters) No residual value; no BPO Economic life of machine 5 years Implicit interest rate 8% Fair value of asset $420,000 What is the balance in the lease payable account after the April 1, 2021, lease payment?
ok nt ences A finance lease agreement calls for quarterly lease payments of $7,056 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 12%. Both the present value of the lease payments and the cost of the asset to the lessor are $168,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a partial amortization table up to the October 1 payment. Note: Enter all amounts as positive values. Round your answers to the nearest whole dollar. Date July 1 July 1 October 1 Lease Payment Effective Interest Decrease in Outstanding balance balance Required B >
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee. Commencement date January 1, 2020 Annual lease payment due at the beginning of each year, beginning with January 1, 2020 $113,864 Residual value of equipment at end of lease term, guaranteed by the lessee $50,000 Expected residual value of equipment at end of lease term $45,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, 2020 $600,000 Lessor's implicit rate 8% Lessee's incremental borrowing rate 8% The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Instructions a. Prepare an amortization schedule that would be suitable for the lessee for the lease term. b. Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease…
None
Applying New Lease Accounting Standards for Operating Leases On January 1 of the current year, CCH Corporation entered into the following lease contract. Based on the facts, CCH Corporation classifies the lease as an operating lease. Details of lease contract Leased asset Office space Lease term 5 years Annual lease payment $115,487 Upfront fees $10,000 Cost of debt capital 5% a. Determine the amount of the lease liability that CCH will add to its balance sheet at the inception of the lease. Amount of lease liability b. What amount will be added to the balance sheet as an asset? Amount added as an asset The rest of the questions are given in pictures below. please answer all parts correctly. i will upvote. thank you!!
The following facts pertain to a non-cancelable lease agreement between Lennox Leasing Company and Gill Company, a lessee.Inception date: May 1, 2017Annual lease payment due at the beginning of each year, beginning with May 1, 2017: $18,829.49Bargain-purchase option price at end of lease term: $4,000.00Lease term: 5 yearsEconomic life of leased equipment: 10 yearsLessor’s cost: $65,000.00; fair value of asset at May 1, 2017, $81,000.00Lessor’s implicit rate: 10%; lessee’s incremental borrowing rate 10%The lessee assumes responsibility for all executory costs. Instructions(Round all numbers to the nearest cent.)(a) Discuss the nature of this lease to Gill Company.(b) Discuss the nature of this lease to Lennox Company.(c) Prepare a lease amortization schedule for Gill Company for the 5-year lease term.(d) Prepare the journal entries on the lessee’s books to refl ect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2017 and…
On January 1, 2021 a company enters a 12-month lease contract for a new laser copier machine. The lease contract legally binds the company to make twelve $2,500 monthly lease payments at the beginning of each month January 1 through December 1, 2021. a. On December 31, 2020 before the lease contract is signed, what is the avoidable cost of leasing the machine for the 2021 production period? What is the economic cost? b. After the lease contract is signed on January 1, what is the avoidable cost of using the machine for the rest of 2021? What is the economic cost? Now suppose the lease agreement is modified by adding a clause that gives the company the right to rent the laser copier to another company during 2021 lease period. The machine can be rented for $1,000 per month. c. What is the amount of the sunk cost on January 1 after the lease is signed? d. What is the amount of the sunk cost on August 1? e. What is the monthly avoidable (and economic) cost of using the laser copier…
On January 1, 2020, Mountain Inc. leases a machine used in its operations. The annual lease payment is $10,000 due on December 31 of 2020, 2021, and 2022. The fair value of the machine on January 1, 2020 is $26,730. The machine has no residual value. Mountain could borrow on a three-year collateralized loan at 6%. If the lease is accounted for as a finance lease, the total expenses related to this lease contract that Mountain Inc. will report in its income statement for the year ending December 31, 2020 is Select one: a. $10,600 b. $10,514 c. $10,717 d. $10,000
The following facts pertain to a non-cancelable lease agreement between Cullumber Leasing Company and Crane Company, a lessee. Commencement date Annual lease payment due at the beginning of each year, beginning with January 1, 2025 Residual value of equipment at end of lease term, guaranteed by the lessee January 1, 2025 $125,377 $54,000 Expected residual value of equipment at end of lease term $49,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, 2025 $660,000 Lessor's implicit rate 8 % Lessee's incremental borrowing rate 8 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Click here to view factor tables. (a) Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places e.g. 5,275.) Date 1/1/25 $ 1/1/25…