January 1, 2024, Paradise Partners decides to upgrade recreational equipment at its resorts. The company is contemplating whether to purchase or lease the new equipment. Use PV of $1 and PVA of $1. (Use appropriate factor(s) from the tables provided.) Required: 1. The company can purchase the equipment by borrowing $292,000 with a 21-month, 12% installment note. Payments of $15,484.98 are due at the end of each month, and the first installment is due on January 31, 2024. Record the issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $12,939.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, record the lease. 3. As of January 1, 2024, does the installment note or the lease have a greater effect on increasing the company's amount of reported debt, and by how much? 4. Suppose the equipment has a total value of $104,000 at the end of the 21-month period, which option (purchasing with installment note or leasing) would likely be better?

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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January 1, 2024, Paradise Partners decides to upgrade recreational equipment at its resorts. The
company is contemplating whether to purchase or lease the new equipment. Use PV of $1 and
PVA of $1. (Use appropriate factor(s) from the tables provided.)
Required:
1. The company can purchase the equipment by borrowing $292,000 with a 21-month, 12%
installment note. Payments of $15,484.98 are due at the end of each month, and the first
installment is due on January 31, 2024. Record the issuance of the installment note payable for
the purchase of the equipment.
2. The company can sign a 21-month lease for the equipment by agreeing to pay $12,939.50 at
the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must
be returned. Assuming a borrowing rate of 12%, record the lease.
3. As of January 1, 2024, does the installment note or the lease have a greater effect on
increasing the company's amount of reported debt, and by how much?
4. Suppose the equipment has a total value of $104,000 at the end of the 21-month period,
which option (purchasing with installment note or leasing) would likely be better?
Transcribed Image Text:January 1, 2024, Paradise Partners decides to upgrade recreational equipment at its resorts. The company is contemplating whether to purchase or lease the new equipment. Use PV of $1 and PVA of $1. (Use appropriate factor(s) from the tables provided.) Required: 1. The company can purchase the equipment by borrowing $292,000 with a 21-month, 12% installment note. Payments of $15,484.98 are due at the end of each month, and the first installment is due on January 31, 2024. Record the issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $12,939.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, record the lease. 3. As of January 1, 2024, does the installment note or the lease have a greater effect on increasing the company's amount of reported debt, and by how much? 4. Suppose the equipment has a total value of $104,000 at the end of the 21-month period, which option (purchasing with installment note or leasing) would likely be better?
Complete this question by entering your answers in the tabs below.
Req 1 and 2
Req 3
Req 4
As of January 1, 2024, does the installment note or the lease have a greater effect on increasing the company's amount of
reported debt, and by how much? (Round other intermediate and final answers to the nearest whole dollar amount.)
increases debt by
The Installment note
$
< Req 1 and 2
0 more.
Req 4 >
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 Req 4 As of January 1, 2024, does the installment note or the lease have a greater effect on increasing the company's amount of reported debt, and by how much? (Round other intermediate and final answers to the nearest whole dollar amount.) increases debt by The Installment note $ < Req 1 and 2 0 more. Req 4 >
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