On January 1, 2020, Indigo Animation sold a truck to Peete Finance for $48,000 and immediately leased it back. The truck was carried on Indigo's books at $43,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Indigo at lease-end. The lease requires 5 equal rental payments of $11,707 at the end of each year (first payment on January 1, 2021). The appropriate rate of interest is 7%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Indigo's 2020 journal entries. (Credit account titles are automatically indented when the 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 O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit 1/1/20 Cash Lease Receivable
On January 1, 2020, Indigo Animation sold a truck to Peete Finance for $48,000 and immediately leased it back. The truck was carried on Indigo's books at $43,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Indigo at lease-end. The lease requires 5 equal rental payments of $11,707 at the end of each year (first payment on January 1, 2021). The appropriate rate of interest is 7%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Indigo's 2020 journal entries. (Credit account titles are automatically indented when the 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 O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit 1/1/20 Cash Lease Receivable
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 3E: Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides...
Related questions
Question
![On January 1, 2020, Indigo Animation sold a truck to Peete Finance for $48,000 and immediately leased it back. The truck was carried
on Indigo's books at $43,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Indigo
at lease-end. The lease requires 5 equal rental payments of $11,707 at the end of each year (first payment on January 1, 2021). The
appropriate rate of interest is 7%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term.
Prepare Indigo's 2020 journal entries. (Credit account titles are automatically indented when the 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 O decimal places, e.g. 5,275.
Record journal entries in the order presented in the problem.)
Click here to view factor tables.
Date
Account Titles and Explanation
Debit
Credit
/20
Cash
Lease Receivable
12/31/20
Right-of-Use Asset
Right-of-Use Asset](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0f27510b-2dba-4166-bbe5-25e12066f2e9%2Fe41d8eb6-4e97-4745-a45f-8d93f29599ad%2Ft1l8yus_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2020, Indigo Animation sold a truck to Peete Finance for $48,000 and immediately leased it back. The truck was carried
on Indigo's books at $43,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Indigo
at lease-end. The lease requires 5 equal rental payments of $11,707 at the end of each year (first payment on January 1, 2021). The
appropriate rate of interest is 7%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term.
Prepare Indigo's 2020 journal entries. (Credit account titles are automatically indented when the 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 O decimal places, e.g. 5,275.
Record journal entries in the order presented in the problem.)
Click here to view factor tables.
Date
Account Titles and Explanation
Debit
Credit
/20
Cash
Lease Receivable
12/31/20
Right-of-Use Asset
Right-of-Use Asset
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning