Blossom Incorporated leases a piece of machinery to Ayayai Company on January 1, 2020, under the following terms.1. The lease is to be for 4 years with rental payments of $15,942 to be made at the beginning of each year.2. The machinery’ has a fair value of $85,650, a book value of $63,920, and an economic life of 10 years.3. At the end of the lease term, both parties expect the machinery to have a residual value of $31,960. To protect against a large loss, Blossom requests Ayayai to guarantee $22,720 of the residual value, which Ayayai agrees to do.4. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature.5. The implicit rate is 5%, which is known by Ayayai.6. Collectibility of the payments is probable.Click here to view factor tables.(b) Prepare the journal entries for Ayayai for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.)DateAccount Titles and ExplanationDebitCreditJan. 1 (To record lease) Jan. 1 (To records first lease payment) Dec. 31 (To record accrued interest) Dec. 31 (To record amortization expense) C. Prepare the journal entries for Blossom for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) TABLE 6.3 Future Value of an Ordinary Annuity of i(1 + i" -FVF-OA=(n)Periods2%2%%3%4%5%6%1.000002.0400011.000001.000001.000001.000001.000002.020002.025002.030002.050002.060003.060403.075633.090903.121603.152503.183604.121614.152524.183634.246464.310134.374625.204045.256335.309145.416325.525635.637096.308126.387746.468416.632986.801916.9753277.434287.547437.662467.898298.142018.393848,582978.736128.892349.214239.549119.8974799.754639.9545210.1591110.5828011.0265611.491321010.9497211.2033811.4633812.0061112.5778913.180791112.1687212.4834712.8078013.4863514.2067914.971641213.4120913.7955514.1920315.0258115.9171316.8699418.8821421.015071314.6803315.1404415.6177916.6268417.712981415.9739416.5189517.0863218.2919119.598631517.2934217.9319318.5989120.0235921.5785623.275971618.6392919.3802220.1568821.8245323.6574925.6725328.2128830.905651720.0120720.8647321.7615923.6975125.840371821.4123122.3863523.4144425.6454128.132381922.8405623.9460125.1168727.6712330.5390033.759992024.2973725.5446626.8703729.7780833.0659536.785592125.7833227.1832728.6764931.9692035.7192539.992732227.2989828.8628630.5367834.2479738.5062143.392292328.8449630.5844332.4528836.6178941.4304846.995832430.4218632.3490434.4264739.0826044.5020050.815582532.0303034.1577636.4592641.6459147.7271054.864512633.6709136.0117138.5530444.3117451.1134559.156382735.3443237.9120040.7096347.0842154.6691363.705772837.0512139.8598042.9309249.9675858.4025868.528112938.7922341.8563045.2188552.9662962.3227173.639803040.5680843.9027047.5754256.0849466.4388579.068193142.3794446.0002750.0026859.3283470.7607984.801683244.2270348.1502852.5027662.7014775.2988390.889783346.1115750.3540355.0778466.2095380.0637797.343163448.0338052.6128957.7301869.8579185.06696104.183763549.9944854.9282160.4620873.6522290.32031111.434783651.9943757.3014163.2759477.5983195.83632119.120873754.0342559.7339566.1742281.70225101.62814127.268123856.1149462.2273069.1594585.97034107.70956135.904213958.2372464.7829872.2342390.40915114.09502145.068464060.4019867.4025575.4012695.02552120.79977154.76197-234n TABLE 6.4 Present Value of an Ordinary Annuity of 11.1-(1 + j"PVF-OAniPeriods2%2%%3%4%5%6%198039.97561.97087.96154.952389434021.941561.927421.913471.886091.859411.8333932.883882.856022.828612.775092.723252.6730143.807733.761973.717103.629903.545953.4651154.713464.645834.579714.451824.329484.212365.601435.508136.349395.417195.242145.075694.917326.471996.230286.002055.786376.463217.107825.582387.170147.970877.019697.786117.325486.732746.209798.162247.435336.80169108.982598.752068.530208.110907.721737.36009119.786859.514219.252628.760488.306417.886871210.5753410.257769.954009.385078.86325B.383841311.3483710.9831910.634969.985659.39357B.852681412.1062511.6909111.2960710.563129.898649.294981512.8492612.3813811.9379411.1183910.379669.712251613.5777113.0550012.5611011.6523010.8377710.105901714.2918713.7122013.1661212.1656711.2740710.4772612.6593013.133941814.9920314.3533613.7535111.6895910.827601915.6784614.9788914.3238012.0853211.158122016.3514315.5891614.8774713.5903312.4622111.469922117.0112116.1845515.4150214.0291612.8211511.764082217.6580516.7654115.9369214.4511213.1630012.0415823182922017.3321116.4436114.8568413.4885712.303382418.9139317.8849916.9355415.2469613.7986414.0939412.550362519.5234618.4243817.4131515.6220812.783362620.1210418.9506117.8768415.9827714.3751913.003172720.7069019.4640118.3270316.3295914.6430313.210632821.2812719.9648918.7641116.6630814.8981313.406162921.8443820.4535519.1884516.9837115.1410713.590723022.3964620.9302919.6004417.2920315.3724513.764833122.9377021.3964120.0004317.5884915.5928113.9290917.8735518.147653223.4683321.8491820.3887715.8026814.084043323.9885622.2918820.7657916.0025514.230233424.4985922.7237921.1318418.4112016.1929014.368143524.9986223.1451621.4872218.6646116.3741914.498253625.4888423.5562521.8322518.9082816.5468514.620993725.9694523.9573222.1672419.1425816.7112914.736783826.4406424.3486022.4924619.3678619.5844819.7927716.8678914.846023926.9025924.7303422.8082217.0170414.949074027.3554825.1027823.1147717.1590915.04630

Journal entry: A journal entry is used to record day-to-day transactions of the business by…

Blossom Incorporated leases a piece of machinery to Ayayai Company on January 1, 2020, under the following terms. 1. The lease is to be for 4 years with rental payments of $15,942 to be made at the beginning of each year. 2. The machinery’ has a fair value of $85,650, a book value of $63,920, and an economic life of 10 years. 3. At the end of the lease term, both parties expect the machinery to have a residual value of $31,960. To protect against a large loss, Blossom requests Ayayai to guarantee $22,720 of the residual value, which Ayayai agrees to do. 4. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. 5. The implicit rate is 5%, which is known by Ayayai. 6. Collectibility of the payments is probable. Click here to view factor tables. (b) Prepare the journal entries for Ayayai for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To records first lease payment) Dec. 31 (To record accrued interest) Dec. 31 (To record amortization expense) C. Prepare the journal entries for Blossom for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.)

Blossom Incorporated leases a piece of machinery to Ayayai Company on January 1, 2020, under the following terms. 1. The lease is to be for 4 years with rental payments of $15,942 to be made at the beginning of each year. 2. The machinery’ has a fair value of $85,650, a book value of $63,920, and an economic life of 10 years. 3. At the end of the lease term, both parties expect the machinery to have a residual value of $31,960. To protect against a large loss, Blossom requests Ayayai to guarantee $22,720 of the residual value, which Ayayai agrees to do. 4. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. 5. The implicit rate is 5%, which is known by Ayayai. 6. Collectibility of the payments is probable. Click here to view factor tables. (b) Prepare the journal entries for Ayayai for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To records first lease payment) Dec. 31 (To record accrued interest) Dec. 31 (To record amortization expense) C. Prepare the journal entries for Blossom for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

(b)

Prepare the journal entries for Ayayai for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1

	(To record lease)
Jan. 1

	(To records first lease payment)
Dec. 31

	(To record accrued interest)
Dec. 31

	(To record amortization expense)

C. Prepare the journal entries for Blossom for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.)

TABLE 6.3 Future Value of an Ordinary Annuity of i
(1 + i" -
FVF-OA=
(n)
Periods
2%
2%%
3%
4%
5%
6%
1.00000
2.04000
1
1.00000
1.00000
1.00000
1.00000
1.00000
2.02000
2.02500
2.03000
2.05000
2.06000
3.06040
3.07563
3.09090
3.12160
3.15250
3.18360
4.12161
4.15252
4.18363
4.24646
4.31013
4.37462
5.20404
5.25633
5.30914
5.41632
5.52563
5.63709
6.30812
6.38774
6.46841
6.63298
6.80191
6.97532
7
7.43428
7.54743
7.66246
7.89829
8.14201
8.39384
8,58297
8.73612
8.89234
9.21423
9.54911
9.89747
9
9.75463
9.95452
10.15911
10.58280
11.02656
11.49132
10
10.94972
11.20338
11.46338
12.00611
12.57789
13.18079
11
12.16872
12.48347
12.80780
13.48635
14.20679
14.97164
12
13.41209
13.79555
14.19203
15.02581
15.91713
16.86994
18.88214
21.01507
13
14.68033
15.14044
15.61779
16.62684
17.71298
14
15.97394
16.51895
17.08632
18.29191
19.59863
15
17.29342
17.93193
18.59891
20.02359
21.57856
23.27597
16
18.63929
19.38022
20.15688
21.82453
23.65749
25.67253
28.21288
30.90565
17
20.01207
20.86473
21.76159
23.69751
25.84037
18
21.41231
22.38635
23.41444
25.64541
28.13238
19
22.84056
23.94601
25.11687
27.67123
30.53900
33.75999
20
24.29737
25.54466
26.87037
29.77808
33.06595
36.78559
21
25.78332
27.18327
28.67649
31.96920
35.71925
39.99273
22
27.29898
28.86286
30.53678
34.24797
38.50621
43.39229
23
28.84496
30.58443
32.45288
36.61789
41.43048
46.99583
24
30.42186
32.34904
34.42647
39.08260
44.50200
50.81558
25
32.03030
34.15776
36.45926
41.64591
47.72710
54.86451
26
33.67091
36.01171
38.55304
44.31174
51.11345
59.15638
27
35.34432
37.91200
40.70963
47.08421
54.66913
63.70577
28
37.05121
39.85980
42.93092
49.96758
58.40258
68.52811
29
38.79223
41.85630
45.21885
52.96629
62.32271
73.63980
30
40.56808
43.90270
47.57542
56.08494
66.43885
79.06819
31
42.37944
46.00027
50.00268
59.32834
70.76079
84.80168
32
44.22703
48.15028
52.50276
62.70147
75.29883
90.88978
33
46.11157
50.35403
55.07784
66.20953
80.06377
97.34316
34
48.03380
52.61289
57.73018
69.85791
85.06696
104.18376
35
49.99448
54.92821
60.46208
73.65222
90.32031
111.43478
36
51.99437
57.30141
63.27594
77.59831
95.83632
119.12087
37
54.03425
59.73395
66.17422
81.70225
101.62814
127.26812
38
56.11494
62.22730
69.15945
85.97034
107.70956
135.90421
39
58.23724
64.78298
72.23423
90.40915
114.09502
145.06846
40
60.40198
67.40255
75.40126
95.02552
120.79977
154.76197
-234n

TABLE 6.4 Present Value of an Ordinary Annuity of 1
1.
1-
(1 + j"
PVF-OAn
i
Periods
2%
2%%
3%
4%
5%
6%
1
98039
.97561
.97087
.96154
.95238
94340
2
1.94156
1.92742
1.91347
1.88609
1.85941
1.83339
3
2.88388
2.85602
2.82861
2.77509
2.72325
2.67301
4
3.80773
3.76197
3.71710
3.62990
3.54595
3.46511
5
4.71346
4.64583
4.57971
4.45182
4.32948
4.21236
5.60143
5.50813
6.34939
5.41719
5.24214
5.07569
4.91732
6.47199
6.23028
6.00205
5.78637
6.46321
7.10782
5.58238
7.17014
7.97087
7.01969
7.78611
7.32548
6.73274
6.20979
8.16224
7.43533
6.80169
10
8.98259
8.75206
8.53020
8.11090
7.72173
7.36009
11
9.78685
9.51421
9.25262
8.76048
8.30641
7.88687
12
10.57534
10.25776
9.95400
9.38507
8.86325
B.38384
13
11.34837
10.98319
10.63496
9.98565
9.39357
B.85268
14
12.10625
11.69091
11.29607
10.56312
9.89864
9.29498
15
12.84926
12.38138
11.93794
11.11839
10.37966
9.71225
16
13.57771
13.05500
12.56110
11.65230
10.83777
10.10590
17
14.29187
13.71220
13.16612
12.16567
11.27407
10.47726
12.65930
13.13394
18
14.99203
14.35336
13.75351
11.68959
10.82760
19
15.67846
14.97889
14.32380
12.08532
11.15812
20
16.35143
15.58916
14.87747
13.59033
12.46221
11.46992
21
17.01121
16.18455
15.41502
14.02916
12.82115
11.76408
22
17.65805
16.76541
15.93692
14.45112
13.16300
12.04158
23
1829220
17.33211
16.44361
14.85684
13.48857
12.30338
24
18.91393
17.88499
16.93554
15.24696
13.79864
14.09394
12.55036
25
19.52346
18.42438
17.41315
15.62208
12.78336
26
20.12104
18.95061
17.87684
15.98277
14.37519
13.00317
27
20.70690
19.46401
18.32703
16.32959
14.64303
13.21063
28
21.28127
19.96489
18.76411
16.66308
14.89813
13.40616
29
21.84438
20.45355
19.18845
16.98371
15.14107
13.59072
30
22.39646
20.93029
19.60044
17.29203
15.37245
13.76483
31
22.93770
21.39641
20.00043
17.58849
15.59281
13.92909
17.87355
18.14765
32
23.46833
21.84918
20.38877
15.80268
14.08404
33
23.98856
22.29188
20.76579
16.00255
14.23023
34
24.49859
22.72379
21.13184
18.41120
16.19290
14.36814
35
24.99862
23.14516
21.48722
18.66461
16.37419
14.49825
36
25.48884
23.55625
21.83225
18.90828
16.54685
14.62099
37
25.96945
23.95732
22.16724
19.14258
16.71129
14.73678
38
26.44064
24.34860
22.49246
19.36786
19.58448
19.79277
16.86789
14.84602
39
26.90259
24.73034
22.80822
17.01704
14.94907
40
27.35548
25.10278
23.11477
17.15909
15.04630

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1.		The lease is to be for 4 years with rental payments of $15,942 to be made at the beginning of each year.
2.		The machinery’ has a fair value of $85,650, a book value of $63,920, and an economic life of 10 years.
3.		At the end of the lease term, both parties expect the machinery to have a residual value of $31,960. To protect against a large loss, Blossom requests Ayayai to guarantee $22,720 of the residual value, which Ayayai agrees to do.
4.		The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature.
5.		The implicit rate is 5%, which is known by Ayayai.
6.		Collectibility of the payments is probable.