On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $426,783 and has an expected economic life of five years. Aqua and Maywood expect the residual value at December 31, 2024, to be $63,000. Negotiations led to Maywood guaranteeing a $89,500 residual value. Equal payments under the lease are $126,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1, 2021 and December 31, 2021, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar.)
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $426,783 and has an expected economic life of five years. Aqua and Maywood expect the residual value at December 31, 2024, to be $63,000. Negotiations led to Maywood guaranteeing a $89,500 residual value. Equal payments under the lease are $126,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1, 2021 and December 31, 2021, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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subject:accounting
![Check my work
Exercise 15-27 (Algo) Lessee; lessee guaranteed residual value [LO15-2, 15-6]
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31,
2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $426,783 and has an expected
economic life of five years. Aqua and Maywood expect the residual value at December 31, 2024, to be $63,000. Negotiations led to
Maywood guaranteeing a $89,500 residual value.
Equal payments under the lease are $126,000 and are due on December 31 of each year with the first payment being made on
December 31, 2021. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of
$1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. & 2. Prepare the appropriate entries for Maywood on January 1, 2021 and December 31, 2021, related to the lease. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the
nearest whole dollar.)
View transaction list](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7fe5a73-45e4-4166-8ba1-50e355550dfc%2F11fae3bf-2f0f-483e-8021-6451123b4ef5%2Fboiimrb_processed.png&w=3840&q=75)
Transcribed Image Text:Check my work
Exercise 15-27 (Algo) Lessee; lessee guaranteed residual value [LO15-2, 15-6]
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31,
2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $426,783 and has an expected
economic life of five years. Aqua and Maywood expect the residual value at December 31, 2024, to be $63,000. Negotiations led to
Maywood guaranteeing a $89,500 residual value.
Equal payments under the lease are $126,000 and are due on December 31 of each year with the first payment being made on
December 31, 2021. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. (FV of $1, PV of $1, FVA of
$1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. & 2. Prepare the appropriate entries for Maywood on January 1, 2021 and December 31, 2021, related to the lease. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the
nearest whole dollar.)
View transaction list
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