equipment's regular selling price is $182,000. The term of the lease is 15 years, beginning January 1, 2023, with equal rental payme of $27,065 at the beginning of each year. Sheridan pays all executory costs directly to third parties. The equipment's fair value at th ease's inception is $182,000. The equipment has a useful life of seven years with no residual value. The lease has an implicit interes rate of 15%, no bargain purchase option, and no transfer of title. Collectibility is reasonably assured, with no additional costs to be ncurred by Carla Vista. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Prepare Carla Vista's January 1, 2023 journal entries at the inception of the lease and the entry at December 31, 2023, to record nterest. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not inde 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 g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Date Jan. 1, 2023 Jan. 1, 2023 Account Titles and Explanation Lease Receivable Sales Revenue Unearned Interest Income (To record inception of lease) Cost of Goods Sold Inventory (To record cost of goods sold) Debit Credit
equipment's regular selling price is $182,000. The term of the lease is 15 years, beginning January 1, 2023, with equal rental payme of $27,065 at the beginning of each year. Sheridan pays all executory costs directly to third parties. The equipment's fair value at th ease's inception is $182,000. The equipment has a useful life of seven years with no residual value. The lease has an implicit interes rate of 15%, no bargain purchase option, and no transfer of title. Collectibility is reasonably assured, with no additional costs to be ncurred by Carla Vista. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Prepare Carla Vista's January 1, 2023 journal entries at the inception of the lease and the entry at December 31, 2023, to record nterest. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not inde 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 g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Date Jan. 1, 2023 Jan. 1, 2023 Account Titles and Explanation Lease Receivable Sales Revenue Unearned Interest Income (To record inception of lease) Cost of Goods Sold Inventory (To record cost of goods sold) Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Carla Vista Corporation, which uses ASPE, leased equipment it had manufactured at a cost of $143,000 for Sheridan, the lessee. The
equipment's regular selling price is $182,000. The term of the lease is 15 years, beginning January 1, 2023, with equal rental payments
of $27,065 at the beginning of each year. Sheridan pays all executory costs directly to third parties. The equipment's fair value at the
lease's inception is $182,000. The equipment has a useful life of seven years with no residual value. The lease has an implicit interest
rate of 15%, no bargain purchase option, and no transfer of title. Collectibility is reasonably assured, with no additional costs to be
incurred by Carla Vista.
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
Prepare Carla Vista's January 1, 2023 journal entries at the inception of the lease and the entry at December 31, 2023, to record
interest. (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
Jan. 1, 2023
Jan. 1, 2023
Jan. 1, 2023
Dec. 31, 2023
Account Titles and Explanation
Lease Receivable
Sales Revenue
Unearned Interest Income
(To record inception of lease)
Cost of Goods Sold
Inventory
(To record cost of goods sold)
Cash
Lease Receivable
(Collection of first lease payment)
Unearned Interest Income
Interest Income
Debit
|||||
Credit
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