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Kingbird Leasing Company signs a lease agreement on January 1, 2025, to lease electronic equipment to Blossom Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement. 1. 2. 3. Blossom has the option to purchase the equipment for $12,000 upon termination of the lease. It is not reasonably certain that Blossom will exercise this option. The equipment has a cost of $100,000 and fair value of $120,000 to Kingbird Leasing. The useful economic life is 2 years, with a residual value of $12,000. Kingbird Leasing desires to earn a return of 6% on its investment.

Kingbird Leasing Company signs a lease agreement on January 1, 2025, to lease electronic equipment to Blossom Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement. 1. 2. 3. Blossom has the option to purchase the equipment for $12,000 upon termination of the lease. It is not reasonably certain that Blossom will exercise this option. The equipment has a cost of $100,000 and fair value of $120,000 to Kingbird Leasing. The useful economic life is 2 years, with a residual value of $12,000. Kingbird Leasing desires to earn a return of 6% on its investment.

FINANCIAL ACCOUNTING
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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Kingbird Leasing Company signs a lease agreement on January 1, 2025, to lease electronic equipment to Blossom Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement. 1. 2. 3. 4. Blossom has the option to purchase the equipment for $12,000 upon termination of the lease. It is not reasonably certain that Blossom will exercise this option. (a) The equipment has a cost of $100,000 and fair value of $120,000 to Kingbird Leasing. The useful economic life is 2 years, with a residual value of $12,000. Kingbird Leasing desires to earn a return of 6% on its investment. Collectibility of the payments by Kingbird Leasing is probable. Click here to view factor tables. Prepare the journal entries on the books of Kingbird Leasing to record the payments received under the lease and to recognize income for the years 2025 and 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.) Date + Account Titles and Explanation Debit III
Transcribed Image Text:Kingbird Leasing Company signs a lease agreement on January 1, 2025, to lease electronic equipment to Blossom Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement. 1. 2. 3. 4. Blossom has the option to purchase the equipment for $12,000 upon termination of the lease. It is not reasonably certain that Blossom will exercise this option. (a) The equipment has a cost of $100,000 and fair value of $120,000 to Kingbird Leasing. The useful economic life is 2 years, with a residual value of $12,000. Kingbird Leasing desires to earn a return of 6% on its investment. Collectibility of the payments by Kingbird Leasing is probable. Click here to view factor tables. Prepare the journal entries on the books of Kingbird Leasing to record the payments received under the lease and to recognize income for the years 2025 and 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.) Date + Account Titles and Explanation Debit III
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