On January 1, 20x2, James Industries entered into an agreement to lease equipment to Espinoza Moving & Storage. The leasequalifies as a sales-type lease. James paid $210,000 for the equipment and is leasing it to Espinoza for $32,000 per year, anamount that will return 8% to James Industries. The present value of the lease payments is $210,000. The lease payments aredue each January 1, beginning in 20x2. James Industries has a December 31st year-end. What is the appropriate journal entryJames Industries should make on December 31, 20x2 to record interest on the lease?Multiple ChoiceInterest receivableInterest revenueCashInterest revenue16,80016,800< Prev16,80016.8007 of 24‒‒‒▪▪▪▪SAMSUNGNext >őENG

When equipment is given on lease than the payments from the clients are received and these payments…

January 1, 20x2, James Industries entered into an agreement to lease equipment to Espir alifies as a sales-type lease. James paid $210,000 for the equipment and is leasing it to Esp ount that will return 8% to James Industries. The present value of the lease payments is $2 e each January 1, beginning in 20x2. James Industries has a December 31st year-end. WH mes Industries should make on December 31, 20x2 to record interest on the lease? Multiple Choice

January 1, 20x2, James Industries entered into an agreement to lease equipment to Espir alifies as a sales-type lease. James paid $210,000 for the equipment and is leasing it to Esp ount that will return 8% to James Industries. The present value of the lease payments is $2 e each January 1, beginning in 20x2. James Industries has a December 31st year-end. WH mes Industries should make on December 31, 20x2 to record interest on the lease? Multiple Choice

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

On January 1, 20x2, James Industries entered into an agreement to lease equipment to Espinoza Moving & Storage. The lease
qualifies as a sales-type lease. James paid $210,000 for the equipment and is leasing it to Espinoza for $32,000 per year, an
amount that will return 8% to James Industries. The present value of the lease payments is $210,000. The lease payments are
due each January 1, beginning in 20x2. James Industries has a December 31st year-end. What is the appropriate journal entry
James Industries should make on December 31, 20x2 to record interest on the lease?
Multiple Choice
Interest receivable
Interest revenue
Cash
Interest revenue
16,800
16,800
< Prev
16,800
16.800
7 of 24
‒‒‒
▪▪▪▪
SAMSUNG
Next >
ő
ENG

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