On January 1, 2020, Swifty Animation sold a truck to Peete Finance for $49,000 and immediately leased it back. The truck was carried on Swifty’s books at $43,000. The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Swifty at lease-end. The lease requires three equal rental payments of $14,900 at the end of each year (first payment on January 1, 2021). The appropriate rate of interest is 5%, the truck has a useful life of 5 years, and the residual value at the end of the lease term is expected to be $14,000, none of which is guaranteed. Prepare Swifty’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 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)
On January 1, 2020, Swifty Animation sold a truck to Peete Finance for $49,000 and immediately leased it back. The truck was carried on Swifty’s books at $43,000. The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Swifty at lease-end. The lease requires three equal rental payments of $14,900 at the end of each year (first payment on January 1, 2021). The appropriate rate of interest is 5%, the truck has a useful life of 5 years, and the residual value at the end of the lease term is expected to be $14,000, none of which is guaranteed.
Prepare Swifty’s 2020
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