Kim Corp. leased vision-testing equipment from General Third Company on January 1, 2021. General Third Company manufactured the equipment at a cost of $280,000 and lists a cash selling price of $350,248. Appropriate adjusting entries are made quarterly. Lease term 5 years (20 quarterly periods) Quarterly lease payments $21,000 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter Economic life of asset 5 years Interest rate charged by the lessor 8% Required: 1. Prepare appropriate entries for Kim Corp. to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021. 2. Prepare appropriate entries for General Third Company to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021
Kim Corp. leased vision-testing equipment from General Third Company on January 1, 2021. General Third Company manufactured the equipment at a cost of $280,000 and lists a cash selling price of $350,248. Appropriate
Lease term
5 years (20 quarterly periods)
Quarterly lease payments
$21,000 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter
Economic life of asset
5 years
Interest rate charged by the lessor
8%
Required:
1. Prepare appropriate entries for Kim Corp. to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021.
2. Prepare appropriate entries for General Third Company to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
