Crane Co. as lessee records a finance lease of machinery on January 1, 2021. The seven annual lease payments of $819,000 are made at the end of each year. The present value of the lease payments at 9% is $4,122,000. Crane uses the effective-interest method of amortization and sum-of-the-years'-digits depreciation (no residual value). Crane Co.Lease Amortization ScheduleAnnual LeaseInterest onReduction inLeaseReceipt/PaymentReceivable/LiabilityReceivable/LiabilityReceivable/Liability4122000819000$370980$44802036739808190003306584883423185683%24%24 Prepare all of Crane's journal entries for 2021. (Credit account titles are automatically indented when amount is entered. Do notindent manually.)Account Titles and ExplanationDebitCredit(To record the lease)(To record the first lease payment)(To record depreciation)

The present value of lease payment is $4,122,000. Therefore, Right of use Asset would be $4,122,000.…

Answered: Crane Co. as lessee records a finance…

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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Crane Co. as lessee records a finance lease of machinery on January 1, 2021. The seven annual lease payments of $819,000 are made at the end of each year. The present value of the lease payments at 9% is $4,122,000. Crane uses the effective-interest method of amortization and sum-of-the-years'-digits depreciation (no residual value).

Crane Co.
Lease Amortization Schedule
Annual Lease
Interest on
Reduction in
Lease
Receipt/Payment
Receivable/Liability
Receivable/Liability
Receivable/Liability
4122000
819000
$
370980
$
448020
3673980
819000
330658
488342
3185683
%24
%24

Prepare all of Crane's journal entries for 2021. (Credit account titles are automatically indented when amount is entered. Do not
indent manually.)
Account Titles and Explanation
Debit
Credit
(To record the lease)
(To record the first lease payment)
(To record depreciation)

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