Lynbrook, Inc. is considering leasing a CAT Scan machine for its operations. As the Controller of Lynbrook, you have been asked to provide management with the lease information related to the CAT Scan. Lynbrook is considering leasing the machine from Capital Leasing, who in turn purchased the machine from the manufacturer, ScanHouse Corp. for $1,000,000. Required: Round your answers to the nearest whole dollar amounts. 1. How should this lease be classified by Lynbrook and by Capital Leasing? 2. Prepare appropriate entries for both Lynbrook and Capital Leasing from the beginning of the lease through the second rental payment on April 1, 2020. Depreciation and amortization are recorded at the end of each fiscal year (December 31). 3. Assume Lynbrook leased the machine directly from the manufacturer, ScanHouse Corp., which produced the machine at a cost of $800,000. Prepare appropriate entries for ScanHouse from the beginning of the lease through the second rental payment on April 1, 2020. Part II Lynbrook, Inc. is considering a second project to lease several trucks under a two-year operating lease agreement from Jimson Leasing. Jimson has agreed to finance the trucks at an annual interest rate of 8%. The companies have agreed to a contract that requires four rent payments of $50,000 each, payable quarterly on March 31, June 30, September 30, and December 31 each year. Jimson Leasing purchased the trucks for $600,000 and have an estimated useful life of five years with no salvage value. Both companies record amortization and depreciation quarterly. Required: Lynbrook has agreed to lease the trucks, effective January 1, 2020. Prepare all of the appropriate journal entries for Lynbrook relating to the lease of the trucks for the first year of the lease (all 2020 entries). Round your answers to the nearest whole dollar amounts.
Part I
Lynbrook, Inc. is considering leasing a CAT Scan machine for its operations. As the Controller of Lynbrook, you have been asked to provide management with the lease information related to the CAT Scan. Lynbrook is considering leasing the machine from Capital Leasing, who in turn purchased the machine from the manufacturer, ScanHouse Corp. for $1,000,000.
Required:
Round your answers to the nearest whole dollar amounts.
1. How should this lease be classified by Lynbrook and by Capital Leasing?
2. Prepare appropriate entries for both Lynbrook and Capital Leasing from the beginning of the lease through the second rental payment on April 1, 2020.
3. Assume Lynbrook leased the machine directly from the manufacturer, ScanHouse Corp., which produced the machine at a cost of $800,000. Prepare appropriate entries for ScanHouse from the beginning of the lease through the second rental payment on April 1, 2020.
Part II
Lynbrook, Inc. is considering a second project to lease several trucks under a two-year operating lease agreement from Jimson Leasing. Jimson has agreed to finance the trucks at an annual interest rate of 8%. The companies have agreed to a contract that requires four rent payments of $50,000 each, payable quarterly on March 31, June 30, September 30, and December 31 each year. Jimson Leasing purchased the trucks for $600,000 and have an estimated useful life of five years with no salvage value. Both companies record amortization and depreciation quarterly.
Required:
Lynbrook has agreed to lease the trucks, effective January 1, 2020. Prepare all of the appropriate
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