c. Prepare the entries for Abel Company on January 1 and December 31 of the first year of the lease. . Note: Round your answers to the nearest whole dollar. Date Jan. 1, Year 1 Jan. 1, Year 1 Check Account Namel 3195 Right-of-Use Asset Cash Lease Liability To record asset and liability related to lease Lease Liability Dec. 31, Year 1 Interest Expense Lease Liability To record interest Dec. 31, Year 1 Amortization Expense Right-of-Use Asset To record amortization Cash To record lease payment V V Dr. 52,755 0 0 0 0 0 0 Cr. 0x 52,755 * 42,204 * 0x 0x OO 0x X X 0x 0x 0 x 17 c. Prepare the entries for Abel Company on January 1 and December 31 of the first year of the lease. Note: Round your answers to the nearest whole dollar. \ table[[Date, Account Ne,, Dr., Cr., ], [Jan. 1, Year 1, Right - of - Use Asset, v, 52, 755, 0, xRecording Finance Lease, Unguaranteed Residual, Initial Direct Costs - Lessee On January 1 of Year 1, Cane Company signed a five-year lease contract for equipment with Abel Company. The equipment had a normal selling price of $55,000 and an estimated useful life of six years. Five annual payments of $11,815 are payable by Abel on each January 1, beginning at the lease commencement. The asset reverts to Cane at the end of the lease term. Cane's implicit interest rate is 6%, which is known to Abel. Abel also paid legal fees in the execution of the lease of $1,800 on January 1 of Year 1, and the equipment is estimated to have an unguaranteed residual value of $3,000 at the end of the lease. Required a. How would Abel Company classify the lease? Lease Liability Schedule Journal Entries b. Prepare a schedule of the lease liability for the first two years of the lease term. Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule.
c. Prepare the entries for Abel Company on January 1 and December 31 of the first year of the lease. . Note: Round your answers to the nearest whole dollar. Date Jan. 1, Year 1 Jan. 1, Year 1 Check Account Namel 3195 Right-of-Use Asset Cash Lease Liability To record asset and liability related to lease Lease Liability Dec. 31, Year 1 Interest Expense Lease Liability To record interest Dec. 31, Year 1 Amortization Expense Right-of-Use Asset To record amortization Cash To record lease payment V V Dr. 52,755 0 0 0 0 0 0 Cr. 0x 52,755 * 42,204 * 0x 0x OO 0x X X 0x 0x 0 x 17 c. Prepare the entries for Abel Company on January 1 and December 31 of the first year of the lease. Note: Round your answers to the nearest whole dollar. \ table[[Date, Account Ne,, Dr., Cr., ], [Jan. 1, Year 1, Right - of - Use Asset, v, 52, 755, 0, xRecording Finance Lease, Unguaranteed Residual, Initial Direct Costs - Lessee On January 1 of Year 1, Cane Company signed a five-year lease contract for equipment with Abel Company. The equipment had a normal selling price of $55,000 and an estimated useful life of six years. Five annual payments of $11,815 are payable by Abel on each January 1, beginning at the lease commencement. The asset reverts to Cane at the end of the lease term. Cane's implicit interest rate is 6%, which is known to Abel. Abel also paid legal fees in the execution of the lease of $1,800 on January 1 of Year 1, and the equipment is estimated to have an unguaranteed residual value of $3,000 at the end of the lease. Required a. How would Abel Company classify the lease? Lease Liability Schedule Journal Entries b. Prepare a schedule of the lease liability for the first two years of the lease term. Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:c. Prepare the entries for Abel Company on January 1 and December 31 of the first year of the lease.
. Note: Round your answers to the nearest whole dollar.
Date
Jan. 1, Year 1
Jan. 1, Year 1
Check
Account Namel
3195
Right-of-Use Asset
Cash
Lease Liability
To record asset and liability related to lease
Lease Liability
Dec. 31, Year 1 Interest Expense
Lease Liability
To record interest
Dec. 31, Year 1 Amortization Expense
Right-of-Use Asset
To record amortization
Cash
To record lease payment
V
V
Dr.
52,755
0
0
0
0
0
0
Cr.
0x
52,755 *
42,204 *
0x
0x
OO
0x
X X
0x
0x
0 x
17
![c. Prepare the entries for Abel Company on January 1 and December 31 of the
first year of the lease. Note: Round your answers to the nearest whole dollar. \
table[[Date, Account Ne,, Dr., Cr., ], [Jan. 1, Year 1, Right - of - Use Asset,
v, 52, 755, 0, xRecording Finance Lease, Unguaranteed Residual, Initial Direct
Costs - Lessee On January 1 of Year 1, Cane Company signed a five-year
lease contract for equipment with Abel Company. The equipment had a normal
selling price of $55,000 and an estimated useful life of six years. Five annual
payments of $11,815 are payable by Abel on each January 1, beginning at the
lease commencement. The asset reverts to Cane at the end of the lease term.
Cane's implicit interest rate is 6%, which is known to Abel. Abel also paid legal
fees in the execution of the lease of $1,800 on January 1 of Year 1, and the
equipment is estimated to have an unguaranteed residual value of $3,000 at
the end of the lease. Required a. How would Abel Company classify the lease?
Lease Liability Schedule Journal Entries b. Prepare a schedule of the lease
liability for the first two years of the lease term. Note: Round each amount in
the schedule to the nearest whole dollar. Use the rounded amount for later
calculations in the schedule.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2c2a5a6a-1705-4081-88a0-53da8029a49c%2F0d0549b1-2cfc-4075-b868-7fba0048555e%2F0ly0z8v_processed.png&w=3840&q=75)
Transcribed Image Text:c. Prepare the entries for Abel Company on January 1 and December 31 of the
first year of the lease. Note: Round your answers to the nearest whole dollar. \
table[[Date, Account Ne,, Dr., Cr., ], [Jan. 1, Year 1, Right - of - Use Asset,
v, 52, 755, 0, xRecording Finance Lease, Unguaranteed Residual, Initial Direct
Costs - Lessee On January 1 of Year 1, Cane Company signed a five-year
lease contract for equipment with Abel Company. The equipment had a normal
selling price of $55,000 and an estimated useful life of six years. Five annual
payments of $11,815 are payable by Abel on each January 1, beginning at the
lease commencement. The asset reverts to Cane at the end of the lease term.
Cane's implicit interest rate is 6%, which is known to Abel. Abel also paid legal
fees in the execution of the lease of $1,800 on January 1 of Year 1, and the
equipment is estimated to have an unguaranteed residual value of $3,000 at
the end of the lease. Required a. How would Abel Company classify the lease?
Lease Liability Schedule Journal Entries b. Prepare a schedule of the lease
liability for the first two years of the lease term. Note: Round each amount in
the schedule to the nearest whole dollar. Use the rounded amount for later
calculations in the schedule.
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