Neri Foods Corporation leased a commercial food processor on September 30, 2024. The five-year finance lease agreement calls for Neri to make quarterly lease payments of $274,083, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2024. Neri's incremental borrowing rate is 12%. Neri records amortization on a straight-line basis at the end of each fiscal year. Neri recorded the lease as follows: September 30, 2024 General Journal Right-of-use asset (calculated below) Lease payable (calculated below) Lease payable Cash (first payment) Calculation of the present value of lease payments $274,083 × 15.3238* = $4,200,000 (rounded) *Present value of an annuity due of $1: n = 20, i = 3% Required: What would be the pretax amounts related to the lease that Neri would report in its statement of cash flows for the year ended December 31, 2024? Note: Cash outflows should be indicated with a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars and not in millions. Debit 4,200,000 Credit 4,200,000 274,083 274,083
Neri Foods Corporation leased a commercial food processor on September 30, 2024. The five-year finance lease agreement calls for Neri to make quarterly lease payments of $274,083, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2024. Neri's incremental borrowing rate is 12%. Neri records amortization on a straight-line basis at the end of each fiscal year. Neri recorded the lease as follows: September 30, 2024 General Journal Right-of-use asset (calculated below) Lease payable (calculated below) Lease payable Cash (first payment) Calculation of the present value of lease payments $274,083 × 15.3238* = $4,200,000 (rounded) *Present value of an annuity due of $1: n = 20, i = 3% Required: What would be the pretax amounts related to the lease that Neri would report in its statement of cash flows for the year ended December 31, 2024? Note: Cash outflows should be indicated with a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars and not in millions. Debit 4,200,000 Credit 4,200,000 274,083 274,083
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
1.
Transcribed Image Text:Item
Right-of-use
asset
Lease payments:
Principal
Interest
Answer is not complete.
Reported in Statement of Cash Flows as
Disclosure notes for Statement of Cash Flows
Outflow from financing activities
Outflow from operating activities
$
Amount
4,200,000
Transcribed Image Text:Neri Foods Corporation leased a commercial food processor on September 30, 2024. The five-year
finance lease agreement calls for Neri to make quarterly lease payments of $274,083, payable each
September 30, December 31, March 31, June 30, with the first payment at September 30, 2024.
Neri's incremental borrowing rate is 12%. Neri records amortization on a straight-line basis at the
end of each fiscal year. Neri recorded the lease as follows:
September 30, 2024
General Journal
Right-of-use asset (calculated below)
Lease payable (calculated below)
Lease payable
Cash (first payment)
Calculation of the present value of lease payments
$274,083 × 15.3238* = $4,200,000 (rounded)
*Present value of an annuity due of $1: n = 20, i = 3%
Required:
What would be the pretax amounts related to the lease that Neri would report in its statement of
cash flows for the year ended December 31, 2024?
Note: Cash outflows should be indicated with a minus sign. Do not round your intermediate
calculations. Enter your answers in whole dollars and not in millions.
Debit
4,200,000
274,083
Credit
4,200,000
274,083
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