MODULE 12 GRADED ASSIGNMENT Question 12 Linda Leasing Company signs an agreement on January 1, 2025, to lease equipment to Swifty Company. The following information relates to this agreement. 1 The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2 The fair value of the asset at January 1, 2025, is $72,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $12,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $21,250.90 to the lessor, beginning on January 1, 2025. 5. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. 6. Swifty uses the straight-line depreciation method for all equipment. Click here to view factor tables. Prepare all of the journal entries for the lessee for 2025 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period and round answers to 2 decimal places, eg. 5,265.25. List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease liability)
MODULE 12 GRADED ASSIGNMENT Question 12 Linda Leasing Company signs an agreement on January 1, 2025, to lease equipment to Swifty Company. The following information relates to this agreement. 1 The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2 The fair value of the asset at January 1, 2025, is $72,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $12,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $21,250.90 to the lessor, beginning on January 1, 2025. 5. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. 6. Swifty uses the straight-line depreciation method for all equipment. Click here to view factor tables. Prepare all of the journal entries for the lessee for 2025 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period and round answers to 2 decimal places, eg. 5,265.25. List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease liability)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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answer must be in table format or i will give down vote
Transcribed Image Text:MODULE 12 GRADED ASSIGNMENT
Question 12
Linda Leasing Company signs an agreement on January 1, 2025, to lease equipment to Swifty Company. The following information relates to this agreement.
1
The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years.
2
The fair value of the asset at January 1, 2025, is $72,000.
3.
The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $12,000, none of which is guaranteed.
4.
The agreement requires equal annual rental payments of $21,250.90 to the lessor, beginning on January 1, 2025.
5.
The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee.
6.
Swifty uses the straight-line depreciation method for all equipment.
Click here to view factor tables.
Prepare all of the journal entries for the lessee for 2025 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period
and round answers to 2 decimal places, eg. 5,265.25. List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record
titles and enter O for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
(To record the lease)
(To record lease liability)
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