On December 31, 2019, Splish Brothers Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Splish Brothers to make annual payments of $8,148 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $5,500 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Splish Brothers uses the straight-line method of depreciation for all of its plant assets. Splish Brothers’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown. Prepare all necessary journal entries for Splish Brothers for this lease through December 31, 2020. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit choose a transaction date enter an account title to record the lease enter a debit amount enter a credit amount enter an account title to record the lease enter a debit amount enter a credit amount (To record the lease) choose a transaction date enter an account title to record first lease payment enter a debit amount enter a credit amount enter an account title to record first lease payment enter a debit amount enter a credit amount (To record first lease payment) choose a transaction date enter an account title to record amortization of the right-of-use asset enter a debit amount enter a credit amount enter an account title to record amortization of the right-of-use asset enter a debit amount enter a credit amount (To record amortization of the right-of-use asset) choose a transaction date enter an account title to record interest expense enter a debit amount enter a credit amount enter an account title to record interest expense enter a debit amount enter a credit amount enter an account title to record interest expense enter a debit amount enter a credit amount (To record interest expense)

On December 31, 2019, Splish Brothers Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Splish Brothers to make annual payments of $8,148 at the beginning of each year of the lease, starting December 31, 2019. The machine has an estimated useful life of 6 years and a $5,500 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Splish Brothers uses the straight-line method of depreciation for all of its plant assets. Splish Brothers’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown. Prepare all necessary journal entries for Splish Brothers for this lease through December 31, 2020. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit choose a transaction date enter an account title to record the lease enter a debit amount enter a credit amount enter an account title to record the lease enter a debit amount enter a credit amount (To record the lease) choose a transaction date enter an account title to record first lease payment enter a debit amount enter a credit amount enter an account title to record first lease payment enter a debit amount enter a credit amount (To record first lease payment) choose a transaction date enter an account title to record amortization of the right-of-use asset enter a debit amount enter a credit amount enter an account title to record amortization of the right-of-use asset enter a debit amount enter a credit amount (To record amortization of the right-of-use asset) choose a transaction date enter an account title to record interest expense enter a debit amount enter a credit amount enter an account title to record interest expense enter a debit amount enter a credit amount enter an account title to record interest expense enter a debit amount enter a credit amount (To record interest expense)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Prepare all necessary journal entries for Splish Brothers for this lease through December 31, 2020. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

choose a transaction date

enter an account title to record the lease

enter a debit amount

enter a credit amount

enter an account title to record the lease

enter a debit amount

enter a credit amount

(To record the lease)

choose a transaction date

enter an account title to record first lease payment

enter a debit amount

enter a credit amount

enter an account title to record first lease payment

enter a debit amount

enter a credit amount

(To record first lease payment)

choose a transaction date

enter an account title to record amortization of the right-of-use asset

enter a debit amount

enter a credit amount

enter an account title to record amortization of the right-of-use asset

enter a debit amount

enter a credit amount

(To record amortization of the right-of-use asset)

choose a transaction date

enter an account title to record interest expense

enter a debit amount

enter a credit amount

enter an account title to record interest expense

enter a debit amount

enter a credit amount

enter an account title to record interest expense

enter a debit amount

enter a credit amount

(To record interest expense)

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