7Company A (lessee) has reached a lease agreement with Company B (lessor) to lease a new carpet weaving machine for five years beginning January 1, Year 1. The present value of the weaving machine is $47,945 18 The following amortization schedule was developed using the lease agreementCOMPANY ALEASE AMORTIZATION SCHEDULEANNUITY-DUE BASISAnnual LeaseCDateJanuary 1, Year 1January 1, Year 1 $10,355.57January 1, Year 2 10,355.57January 1, Year 3 10,355.57January 1, Year 4 10,355.57January 1, Year 5 10,355.57January 1, Year 6 2,500.00PaymentInterestReduction ofLease Liability$10,355.57$0.001,585.788,769.791,234.99 9,120.58870.169,485.40490.759,864.8296.15 2,403.85$54,277.83 $4,277.83$50,000.00LeaseLiabilityO Debit Inventory for $2,403; Credit Lease Receivable for $2,403Debit Lease Receivable for $2,403; Credit Inventory for $2,403O Debit Inventory for $2,500; Credit Lease Receivable for $2,500O Debit Lease Receivable for $2,500; Credit Inventory for $2,500$50,000.0039,644.4330,874.6521,754.0712,268.662,403.850.00What is the journal entry that Company B will make for this lease on January 1, Year 6?A

Company A (sse) has reached a lease agreement with Company 5 (lessor) to lease a new carpet weaving machine for five years beginning January 1, Year 1 The present value of the weaving machine is $47, 045 18 The following amortization schedule was developed using the lease agreement Date January 1, Year 1 January 1, Year 1 COMPANY A LEASE AMORTIZATION SCHEDULE ANNUITY-DUE BASIS Annual Lease Payment $10,355.57 January 1, Year 2 10,355.57 January 1, Year 3 10,355.57 January 1, Year 4 10,355.57 January 1, Year 5 10,355.57 January 1, Year 6 2,500.00 $54,277.83 Interest Reduction of Lease Liability $10,355.57 $0.00 1.585.78 8.769.79 1,234.99 9,120.58 870.16 9.485.40 490.75 9.864.82 96.15 2,403.85 $4,277.83 $50.000.00 Lease Liability $50.000.00 39.644.43 30,874.65 21,754.07 12,268.66 2,403.85 0.00 What is the journal entry that Company B will make for this lease on January 1, Year 67 Debit Inventory for $2,403; Credit Lease Receivable for $2,403 O Debit Lease Receivable for $2.403; Credit Inventory for $2.403 O Debit Inventory for $2,500; Credit Lease Receivable for $2,500 Debit Lease Receivable for $2,500; Credit Inventory for $2,500

Company A (sse) has reached a lease agreement with Company 5 (lessor) to lease a new carpet weaving machine for five years beginning January 1, Year 1 The present value of the weaving machine is $47, 045 18 The following amortization schedule was developed using the lease agreement Date January 1, Year 1 January 1, Year 1 COMPANY A LEASE AMORTIZATION SCHEDULE ANNUITY-DUE BASIS Annual Lease Payment $10,355.57 January 1, Year 2 10,355.57 January 1, Year 3 10,355.57 January 1, Year 4 10,355.57 January 1, Year 5 10,355.57 January 1, Year 6 2,500.00 $54,277.83 Interest Reduction of Lease Liability $10,355.57 $0.00 1.585.78 8.769.79 1,234.99 9,120.58 870.16 9.485.40 490.75 9.864.82 96.15 2,403.85 $4,277.83 $50.000.00 Lease Liability $50.000.00 39.644.43 30,874.65 21,754.07 12,268.66 2,403.85 0.00 What is the journal entry that Company B will make for this lease on January 1, Year 67 Debit Inventory for $2,403; Credit Lease Receivable for $2,403 O Debit Lease Receivable for $2.403; Credit Inventory for $2.403 O Debit Inventory for $2,500; Credit Lease Receivable for $2,500 Debit Lease Receivable for $2,500; Credit Inventory for $2,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

6 Company A (lessee) has reached a lease agreement with Company B (assor) to kase a new carpet weaving machine beginning January 1, Year 1. The lease agreement contains the following information • The lease is for five years, requiring annual payments of $10,355.67 at the beginning of the year. • The weaving machine has a fair value at the beginning of the lease of $50,000; an estimated economic life of five years; and a guaranteed residual value of $2,500 (Company A expects that the value will be greater). • Present value of the weaving machine is $47,945.18. • There are no renewal options. At the end of the lease, the weaving machine will be returned to Company B. • Company A depreciates similar equipment that it purchases on a straight-line basis. • Company B sels the annual lease rate al 5% and Company A is aware of the rate. • The lease is a finance lease. COMPANY A LEASE AMORTIZATION SCHEDULE ANNUITY-DUE BASIS Annual Lease Payment Date January 1, Year 1 January 1, Year 1 January…
ss
San
needed: lease liabilityright of use of assetdepreciation expenseplease use a table for explaining lease liab.
Question Content Area A six-year operating lease requires annual rent payments of $15,000 for years 1, 2, and 3, and annual rent payments of $10,000 for years 4, 5, and 6. The agreement also requires the lessor to pay a $2,800 annual insurance premium for the leased property. Which of the following amounts should be recognized as the rental revenue in year 1 by the lessor? $10,000 $16,800 $15,000 $13,500
Recording Operating Lease-Lessor Gomez Inc. leases a vehicle from CareMax Inc. on January 1 for a three-year period. Gomez agrees to make $9,600 annual payments beginning on January 1. Prepare the journal entries during the year for CareMax Inc. assuming that the fair value of the vehicle is $44,800 and it has a useful life of 6 years with no salvage value (depreciated using the straight-line method). CarMax Inc. appropriately classifies the lease as an operating lease. Note: Round your answers to the nearest whole dollar. Account Name Date Jan, 1 Dec. 31 Dec. 31 Check To record receipt of lease payment To record lease revenue + # To record depreciation → = → # Dr. 0 0 0 0 0 0 Cr. 0 0 0 0 0 0
Determining Amounts in Operating Lease-Lessee Kulver's Inc. leases equipment from Equip Inc. on January 1 under a 3-year operating lease. Kulver's agrees to pay Equip Inc. $15,000 annually with the first payment due on January 1. As an incentive for Kulver's to sign the lease by January 1, Equip Inc. paid Kulver's Inc. $700. Kulver's also incurred legal fees for the review of the lease agreement ($200) and salaries for employees involved in negotiating the lease ($1,300). Assuming an incremental borrowing rate of 7% for Kulver's Inc., determine the value of the lease liability and the right-of- use asset on January 1 for Kulver's. Note: Round your answers to the nearest whole dollar. Lease liability $ 11,620 X Right-of-use asset $ 41,620✔ Check