Larkspur Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Crane 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.   Crane has the option to purchase the equipment for $21,000 upon termination of the lease. It is not reasonably certain that Crane will exercise this option. 2.   The equipment has a cost of $220,000 and fair value of $259,000 to Larkspur Leasing. The useful economic life is 2 years, with a residual value of $21,000. 3.   Larkspur Leasing desires to earn a return of 5% on its investment. 4.   Collectibility of the payments by Larkspur Leasing is probable.           Prepare the journal entries on the books of Larkspur Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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.) Enter Date Enter Account Titles and Explanation Debit Credit 1- enter an account title   enter a debit amount   enter a credit amount                       2- enter an account title     enter a credit amount                      3- enter an account title   enter a debit amount   enter a credit amount                       4- enter an account title   enter a debit amount   enter a credit amount            1- enter an account title   enter a debit amount   enter a credit amount                        2- enter an account title   enter a debit amount   enter a credit amount                        3- enter an account title   enter a debit amount   enter a credit amount            1- enter an account title   enter a debit amount   enter a credit amount                        2- enter an account title   enter a debit amount   enter a credit amount                        3- enter an account title   enter a debit amount   enter a credit amount             Assuming that Crane exercises its option to purchase the equipment on December 31, 2021, prepare the journal entry to record the sale on Larkspur Leasing’s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 12/31/21 enter an account title for the journal entry on December 31 2021   enter a debit amount   enter a credit amount     enter an account title for the journal entry on December 31 2021

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Larkspur Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Crane 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.   Crane has the option to purchase the equipment for $21,000 upon termination of the lease. It is not reasonably certain that Crane will exercise this option.
2.   The equipment has a cost of $220,000 and fair value of $259,000 to Larkspur Leasing. The useful economic life is 2 years, with a residual value of $21,000.
3.   Larkspur Leasing desires to earn a return of 5% on its investment.
4.   Collectibility of the payments by Larkspur Leasing is probable.


 
 
 
 
 
Prepare the journal entries on the books of Larkspur Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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.)

Enter Date
Enter Account Titles and Explanation
Debit
Credit
1-
enter an account title
 
enter a debit amount
 
enter a credit amount
 
                    2-
enter an account title
 
 
enter a credit amount
 
                   3-
enter an account title
 
enter a debit amount
 
enter a credit amount
 
                    4-

enter an account title
 
enter a debit amount
 
enter a credit amount
 
 
 
 
 
 1-
enter an account title
 
enter a debit amount
 
enter a credit amount
 
                     2-
enter an account title
 
enter a debit amount
 
enter a credit amount
 
                     3-
enter an account title
 
enter a debit amount
 
enter a credit amount
 
 
 
 
 
 1-
enter an account title
 
enter a debit amount
 
enter a credit amount
 
                     2-
enter an account title
 
enter a debit amount
 
enter a credit amount
 
                     3-
enter an account title
 
enter a debit amount
 
enter a credit amount
 
 
 
 
 
 
Assuming that Crane exercises its option to purchase the equipment on December 31, 2021, prepare the journal entry to record the sale on Larkspur Leasing’s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
12/31/21
enter an account title for the journal entry on December 31 2021
 
enter a debit amount
 
enter a credit amount
 
 
enter an account title for the journal entry on December 31 2021
 
enter a debit amount
 
enter a credit amount
 
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