Gomez Inc. entered into a contract on January 1 to lease a vehicle for one year, with monthly payments of $1,950 due at the end of each month. The vehicle has a fair value of $90,000. The lease agreement does not contain an option for purchase or renewal. The lessor's implicit rate of return is 5%. Gomez Inc, elects the short-term leasing option. Required a. Prepare the entry for the first monthly payment on January 31. Date Jan. 31 Lease Expense Cash To record lease payment Account Name V V To record lease payment Dr. 1,950 0 Cr. b. Assume instead that monthly lease payments are due at the beginning of the month. Record the entry for the monthly payment on January 1. Date Account Name Dr. Cr. Jan. 1 0 0 0 1,950 0x

Gomez Inc. entered into a contract on January 1 to lease a vehicle for one year, with monthly payments of $1,950 due at the end of each month. The vehicle has a fair value of $90,000. The lease agreement does not contain an option for purchase or renewal. The lessor's implicit rate of return is 5%. Gomez Inc, elects the short-term leasing option. Required a. Prepare the entry for the first monthly payment on January 31. Date Jan. 31 Lease Expense Cash To record lease payment Account Name V V To record lease payment Dr. 1,950 0 Cr. b. Assume instead that monthly lease payments are due at the beginning of the month. Record the entry for the monthly payment on January 1. Date Account Name Dr. Cr. Jan. 1 0 0 0 1,950 0x

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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