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Carla Vista Corporation, which uses ASPE, manufactures replicators. On May 29, 2023, it leased to Sheridan Limited a replicator that cost $265,600 to manufacture and usually sells for $418,000. The lease agreement covers the replicator's 8-year useful life and requires eight equal annual rentals of $71,536 each, beginning May 29, 2023. The equipment reverts to Carla Vista at the end of the lease, at which time it is expected that the replicator will have a residual value of $49,500, which is not guaranteed by Sheridan, the lessee. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare Carla Vista's May 29, 2023 journal entries. (List all debit entries before credit entries. 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 O for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) Date May 29 May 29 Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Inventory Unearned Interest Income (To record inception of lease.) Cash Lease Receivable (Collection of first lease payment.) Debit 621788 265600 71536 Credit 418000 265600 203733 71536

Carla Vista Corporation, which uses ASPE, manufactures replicators. On May 29, 2023, it leased to Sheridan Limited a replicator that cost $265,600 to manufacture and usually sells for $418,000. The lease agreement covers the replicator's 8-year useful life and requires eight equal annual rentals of $71,536 each, beginning May 29, 2023. The equipment reverts to Carla Vista at the end of the lease, at which time it is expected that the replicator will have a residual value of $49,500, which is not guaranteed by Sheridan, the lessee. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare Carla Vista's May 29, 2023 journal entries. (List all debit entries before credit entries. 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 O for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) Date May 29 May 29 Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Inventory Unearned Interest Income (To record inception of lease.) Cash Lease Receivable (Collection of first lease payment.) Debit 621788 265600 71536 Credit 418000 265600 203733 71536

FINANCIAL ACCOUNTING
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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Carla Vista Corporation, which uses ASPE, manufactures replicators. On May 29, 2023, it leased to Sheridan Limited a replicator that cost $265,600 to manufacture and usually sells for $418,000. The lease agreement covers the replicator's 8-year useful life and requires eight equal annual rentals of $71,536 each, beginning May 29, 2023. The equipment reverts to Carla Vista at the end of the lease, at which time it is expected that the replicator will have a residual value of $49,500, which is not guaranteed by Sheridan, the lessee. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare Carla Vista's May 29, 2023 journal entries. (List all debit entries before credit entries. 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 O for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Date May 29 May 29 Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Inventory Unearned Interest Income (To record inception of lease.) Cash Lease Receivable (Collection of first lease payment.) Debit 621788 265600 71536 Credit !!! 418000 265600 203733 71536
Transcribed Image Text:Carla Vista Corporation, which uses ASPE, manufactures replicators. On May 29, 2023, it leased to Sheridan Limited a replicator that cost $265,600 to manufacture and usually sells for $418,000. The lease agreement covers the replicator's 8-year useful life and requires eight equal annual rentals of $71,536 each, beginning May 29, 2023. The equipment reverts to Carla Vista at the end of the lease, at which time it is expected that the replicator will have a residual value of $49,500, which is not guaranteed by Sheridan, the lessee. An interest rate of 12% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare Carla Vista's May 29, 2023 journal entries. (List all debit entries before credit entries. 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 O for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Date May 29 May 29 Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Inventory Unearned Interest Income (To record inception of lease.) Cash Lease Receivable (Collection of first lease payment.) Debit 621788 265600 71536 Credit !!! 418000 265600 203733 71536
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