Natick Industries leased high-tech instruments from Framingham Leasing on January 1, 2024. Natick has the option to renew the lease at the end of two years for an additional three years. Natick is subject to a $40,000 penalty after two years if it fails to renew the lease. Framingham Leasing purchased the equipment from Waltham Machines at a cost of $153,238. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Related Information: Lease term Lease renewal option for an additional Quarterly lease payments Economic life of asset Interest rate charged by the lessor 2 years (8 quarterly periods) 3 years (12 quarterly periods) at January 1, 2024, and at March 31, June 30, September 30, and December 31 thereafter $10,000 5 years 12% Required: Prepare appropriate entries for Natick Industries from the beginning of the lease through March 31, 2024. Appropriate adjusting entries are made quarterly. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to the nearest whole dollar.
Natick Industries leased high-tech instruments from Framingham Leasing on January 1, 2024. Natick has the option to renew the lease at the end of two years for an additional three years. Natick is subject to a $40,000 penalty after two years if it fails to renew the lease. Framingham Leasing purchased the equipment from Waltham Machines at a cost of $153,238. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Related Information: Lease term Lease renewal option for an additional Quarterly lease payments Economic life of asset Interest rate charged by the lessor 2 years (8 quarterly periods) 3 years (12 quarterly periods) at January 1, 2024, and at March 31, June 30, September 30, and December 31 thereafter $10,000 5 years 12% Required: Prepare appropriate entries for Natick Industries from the beginning of the lease through March 31, 2024. Appropriate adjusting entries are made quarterly. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to the nearest whole dollar.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Natick Industries leased high-tech instruments from Framingham Leasing on January 1, 2024. Natick has the option to renew the lease
at the end of two years for an additional three years. Natick is subject to a $40,000 penalty after two years if it fails to renew the lease.
Framingham Leasing purchased the equipment from Waltham Machines at a cost of $153,238.
Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Related Information:
Lease term
Lease renewal option for an additional
Quarterly lease payments
Economic life of asset.
Interest rate charged by the lessor
2
3
$10,000
years (8 quarterly periods)
years (12 quarterly periods)
12%
at January 1, 2024, and at March 31, June 30, September 30, and
December 31 thereafter
5 years
Required:
Prepare appropriate entries for Natick Industries from the beginning of the lease through March 31, 2024. Appropriate adjusting
entries are made quarterly.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your
intermediate calculations and final answers to the nearest whole dollar.
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