On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh. The equipment cost Ghosh $958,200 and has an expected useful life of five years. Ghosh expects the residual value at December 31, 2027, will be $302,200. Negotiations led to the lessee guaranteeing a $342,200 residual value. Equal payments under the finance/sales-type lease are $202,200 and are due on December 31 of each year with the first payment being made on December 31, 2024. • Karrier is aware that Ghosh used a 4% interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required:
On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Ghosh. The equipment cost Ghosh $958,200 and has an expected useful life of five years. Ghosh expects the residual value at December 31, 2027, will be $302,200. Negotiations led to the lessee guaranteeing a $342,200 residual value. Equal payments under the finance/sales-type lease are $202,200 and are due on December 31 of each year with the first payment being made on December 31, 2024. • Karrier is aware that Ghosh used a 4% interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Required:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Do not give answer in image
Transcribed Image Text:On January 1, 2024, Ghosh Industries leased a high-performance conveyer to Karrier Company for a four-year period ending
December 31, 2027, at which time possession of the leased asset will revert back to Ghosh.
• The equipment cost Ghosh $958,200 and has an expected useful life of five years.
• Ghosh expects the residual value at December 31, 2027, will be $302,200.
• Negotiations led to the lessee guaranteeing a $342,200 residual value.
• Equal payments under the finance/sales-type lease are $202,200 and are due on December 31 of each year with the first
payment being made on December 31, 2024.
• Karrier is aware that Ghosh used a 4% interest rate when calculating lease payments.
Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Required:
1. Prepare the appropriate entries for both Karrier and Ghosh on January 1, 2024, to record the lease.
2. Prepare all appropriate entries for both Karrier and Ghosh on December 31, 2024, related to the lease.
Complete this question by entering your answers in the tabs below.
Required 1
Prepare the appropriate entries for both Karrier and Ghosh on January 1, 2024, to record the lease.
Note: If no entry is required for a transaction/event, select "No journal entry required in the first account field. Round your answers to
nearest whole dollar.
View transaction Sist
red 2
Journal entry worksheet
<
2
1
Record the beginning of the lease for Karrier.
Note: Enter debits before credits
Date
January 01, 2024
General Journal
Debit
Credit
Brau
CHE
****
Expert Solution
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 5 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education