Current Attempt in Progress Cullumber Corporation manufactures drones. On December 31, 2024, it leased to Crane Company a drone that had cost $105,100 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires 5 equal annual rentals of $37,300 payable each December 31, beginning December 31, 2024. An interest rate of 9% is implicit in the lease agreement. Collectibility of the rentals is probable. Prepare Cullumber's December 31, 2024, journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when 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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Click here to view factor tables. Date December 31, 2024 December 31, 2024 Account Titles and Explanation (To record the lease) (To record receipt of lease payment) Debit Credit

Current Attempt in Progress Cullumber Corporation manufactures drones. On December 31, 2024, it leased to Crane Company a drone that had cost $105,100 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires 5 equal annual rentals of $37,300 payable each December 31, beginning December 31, 2024. An interest rate of 9% is implicit in the lease agreement. Collectibility of the rentals is probable. Prepare Cullumber's December 31, 2024, journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when 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. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Click here to view factor tables. Date December 31, 2024 December 31, 2024 Account Titles and Explanation (To record the lease) (To record receipt of lease payment) Debit Credit

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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Current Attempt in Progress Crane Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2023, that requires 6 annual payments of $39,000 each, beginning September 1, 2023. In addition, Crane guarantees the lessor a residual value of $29,000 at lease end. The equipment has a useful life of seven years. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE OF 1. (a) Using (1) tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of the capital lease and prepare Crane's September 1, 2023 journal entry assuming an interest rate of 8%.
2. On August 31, 2018, Simmons Inc. leased warehouse equipment from Covington Corp. The lease agreement calls for Simmons to make semiannual lease payments of $50,000 over a 7-year lease term, payable at August 31 and February 28, with the first payment on August 31, 2018. Simmons' incremental borrowing rate is 11%, the same rate Covington used to calculate lease payment amounts. Covington purchased the warehouse equipment at a cost of $700,000 on August 31, 2018 with an expected useful life of 10 years and no salvage value. The fiscal year for both Simmons and Covington ends on December 31. Required: a. What are the present value of the lease payments on August 31, 2018? b. Starting on August 31, 2018 prepare all journal entries related to the lease that Simmons would have to make through December 31, 2020. c. Starting on August 31, 2018 prepare all journal entries related to the lease that Covington would have to make through December 31, 2020. d. What amounts related to the lease…
Abbott Equipment leased a protein analyzer to Werner Chemical, Incorporated, on September 30, 2024. • Abbott purchased the machine from NutraLabs, Incorporated, at a cost of $6.35 million. • The five-year lease agreement calls for Werner to make quarterly lease payments of $449,273, payable each September 30, December 31, March 31, and June 30, with the first payment on September 30, 2024. • Abbott's implicit interest rate is 16%. The useful life of the equipment is five years. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. What pretax amounts related to the lease would Abbott report in its balance sheet on December 31, 2024? 2. What pretax amounts related to the lease would Abbott report in its income statement for the year ended December 31, 2024? 3. What pretax amounts related to the lease would Abbott report in its statement of cash flows for the year ended December 31, 2024? Complete this…
On 1st January 2015, Trademart SAOG entered into an agreement to lease an item of plant from a manufacturer for 5 years. The lease requires five annual payments of RO 200,000 each commencing from 1st January 2016. The plant would have a useful life of five years and with no residual value. The present value of the total lease payments is OMR 840,000. The cost of capital used is 12% find the initial amount of lease liability right to use asset recognition in the first year in the boaks of lessee. ion Lease liability OMR 640,000 and right to use asset OMR 840,000 None of them Lease liability OMR 840,000 and right to use asset OMR 840,000 Lease liability OMR 640,000 and right to use asset OMR 640,000
Federated Fabrications leased a tooling machine on January 1, 2024, for a three-year period ending December 31, 2026. . The lease agreement specified annual payments of $34,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2025. . The company had the option to purchase the machine on December 30, 2026, for $43,000 when its fair value was expected to be $58,000, a sufficient difference that exercise seems reasonably certain. . The machine's estimated useful life was six years with no salvage value. Federated was aware that the lessor's implicit rate of return was 12%. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Calculate the amount Federated should record as a right-of-use asset and lease llability for this finance lease. 2. Prepare an amortization schedule that describes the pattern of interest expense for Federated over the lease term. 3. Prepare…
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American Food Services, Incorporated leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2024. The lease agreement for the $5.6 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value. Barton and Barton's implicit interest rate was 10%. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2024. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2024 and 2026. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 and 4 Prepare an amortization schedule for…
Federated Fabrications leased a tooling machine on January 1, 2024, for a three-year period ending December 31, 2026 • The lease agreement specified annual payments of $47,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2025. The company had the option to purchase the machine on December 30, 2026, for $56,000 when its fair value was expected to be $71,000, a sufficient difference that exercise seems reasonably certain. • The machine's estimated useful life was six years with no salvage value. Federated was aware that the lessor's implicit rate of return was 12%. Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required: 1. Calculate the amount Federated should record as a right-of-use asset and lease liability for this finance lease. 2. Prepare an amortization schedule that describes the pattern of interest expense for Federated over the lease term. 3. Prepare the…
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