Coronado Corporation enters into a 7-year lease of equipment on December 31, 2019, which requires 7 annual payments of $37,300 each, beginning December 31, 2019. In addition, Coronado guarantees the lessor a residual value of $19,400 at the end of the lease. However, Coronado believes it is probable that the expected residual value at the end of the lease term will be $9,400. The equipment has a useful life of 7 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $170,000. Prepare Lost Ark’s 2019 and 2020 journal entries, assuming the implicit rate of the lease is 9% and this is known to Coronado.
Coronado Corporation enters into a 7-year lease of equipment on December 31, 2019, which requires 7 annual payments of $37,300 each, beginning December 31, 2019. In addition, Coronado guarantees the lessor a residual value of $19,400 at the end of the lease. However, Coronado believes it is probable that the expected residual value at the end of the lease term will be $9,400. The equipment has a useful life of 7 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $170,000. Prepare Lost Ark’s 2019 and 2020 journal entries, assuming the implicit rate of the lease is 9% and this is known to Coronado.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Coronado Corporation enters into a 7-year lease of equipment on December 31, 2019, which requires 7 annual payments of $37,300 each, beginning December 31, 2019. In addition, Coronado guarantees the lessor a residual value of $19,400 at the end of the lease. However, Coronado believes it is probable that the expected residual value at the end of the lease term will be $9,400. The equipment has a useful life of 7 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $170,000.
Prepare Lost Ark’s 2019 and 2020journal entries , assuming the implicit rate of the lease is 9% and this is known to Coronado. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.)
Click here to view factor tables.
Prepare Lost Ark’s 2019 and 2020
Click here to view factor tables.
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Choose the correct date
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fill in the Account Titles and Explanation
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Debit
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Credit
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(To record the lease)
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December 31, 2020December 31, 2019
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(To record receipt of lease payment)
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December 31, 2019December 31, 2020
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PLEASE FOLLOW DIRECTIONS THIS IS THE FOURTH TIME I AM RESUBMITTING QUESTIONS TODAY, FILL IN THE BOXES AS YOU SEE THEM TO RECORD THE LEASE HAS 4 JOURNAL ENTRIES THE NEXT PART HAS TWO AND THE LAST PART HAS TWO PLEASE READ THE QUESTION CAREFULLY.
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