Monty Corporation enters into a 7-year lease of equipment on December 31, 2019, which requires 7 annual payments of $41,100 each, beginning December 31, 2019. In addition, Monty guarantees the lessor a residual value of $18,400 at the end of the lease. However, Monty believes it is probable that the expected residual value at the end of the lease term will be $9,200. The equipment has a useful life of 7 years. Prepare Montys' December 31, 2019, journal entries assuming the implicit rate of the lease is 10% and this is known to Monty. (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.) Click here to view factor tables. Date Enter Account Titles Debit Credit December 31, 2019 1- 2- (To record the lease liability) December 31, 2019 1- 2-
Monty Corporation enters into a 7-year lease of equipment on December 31, 2019, which requires 7 annual payments of $41,100 each, beginning December 31, 2019. In addition, Monty guarantees the lessor a residual value of $18,400 at the end of the lease. However, Monty believes it is probable that the expected residual value at the end of the lease term will be $9,200. The equipment has a useful life of 7 years.
Prepare Montys' December 31, 2019,
Click here to view factor tables.
|
Date
|
Enter Account Titles
|
Debit
|
Credit
|
|
December 31, 2019
|
1- |
|
|
|
2-
|
|
|
|
|
(To record the lease liability)
|
|||
|
December 31, 2019
|
1-
|
|
|
|
2-
|
|
|
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
