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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. 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. 3. Kingbird Leasing desires to earn a return of 6% on its investment. 4. Collectibility of the payments by Kingbird Leasing is probable. Click here to view factor tables. (a) Your answer is partially correct. 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 O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Inventory Cash Lease Receivable Interest Revenue Cash Lease Receivable Interest Revenue Debit 120000 89320 Credit 109320 52427 7200 55573 4054

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. 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. 3. Kingbird Leasing desires to earn a return of 6% on its investment. 4. Collectibility of the payments by Kingbird Leasing is probable. Click here to view factor tables. (a) Your answer is partially correct. 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 O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Inventory Cash Lease Receivable Interest Revenue Cash Lease Receivable Interest Revenue Debit 120000 89320 Credit 109320 52427 7200 55573 4054

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...
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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. 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. 3. Kingbird Leasing desires to earn a return of 6% on its investment. 4. Collectibility of the payments by Kingbird Leasing is probable. Click here to view factor tables. (a) Your answer is partially correct. 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 O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Inventory Cash Lease Receivable Interest Revenue Cash Lease Receivable Interest Revenue Debit 120000 89320 Credit 109320 52427 7200 55573 4054
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. 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. 3. Kingbird Leasing desires to earn a return of 6% on its investment. 4. Collectibility of the payments by Kingbird Leasing is probable. Click here to view factor tables. (a) Your answer is partially correct. 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 O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Inventory Cash Lease Receivable Interest Revenue Cash Lease Receivable Interest Revenue Debit 120000 89320 Credit 109320 52427 7200 55573 4054
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