On January 1, 2024, Lesco Leasing leased equipment to Quality Services under a finance/sales-type lease designed to earn Lesco a 14% rate of return for providing long-term financing. The lease agreement specified: Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1). a. Ten annual payments of $59,000 beginning January 1, 2024, the beginning of the lease and each December 31 thereafter through 2032. b. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to Lesco was $321,104. c. The lease qualifies as a finance lease/sales-type lease. d. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $5,000 per year are specified, beginning January 1, 2024. Lesco was to pay this cost as incurred, but lease payments reflect this expenditure. Also included in the $59,000 payments is an insurance premium of $4,000 providing coverage for the equipment. Required: 1. Prepare the appropriate entries for both the lessee and lessor related to the lease on January 1, 2024. 2. Prepare the appropriate entries for both the lessee and lessor related to the lease on December 31, 2024. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate entries for both the lessee and lessor related to the lease on January 1, 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar. View transaction list Journal entry worksheet 2 3 4 Record the beginning of the lease for Quality Services. Note: Enter debits before credits. Date January 01, 2024 General Journal Debit Credit >
On January 1, 2024, Lesco Leasing leased equipment to Quality Services under a finance/sales-type lease designed to earn Lesco a 14% rate of return for providing long-term financing. The lease agreement specified: Note: Use tables, Excel, or a financial calculator. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1). a. Ten annual payments of $59,000 beginning January 1, 2024, the beginning of the lease and each December 31 thereafter through 2032. b. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to Lesco was $321,104. c. The lease qualifies as a finance lease/sales-type lease. d. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $5,000 per year are specified, beginning January 1, 2024. Lesco was to pay this cost as incurred, but lease payments reflect this expenditure. Also included in the $59,000 payments is an insurance premium of $4,000 providing coverage for the equipment. Required: 1. Prepare the appropriate entries for both the lessee and lessor related to the lease on January 1, 2024. 2. Prepare the appropriate entries for both the lessee and lessor related to the lease on December 31, 2024. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate entries for both the lessee and lessor related to the lease on January 1, 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar. View transaction list Journal entry worksheet 2 3 4 Record the beginning of the lease for Quality Services. Note: Enter debits before credits. Date January 01, 2024 General Journal Debit Credit >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:On January 1, 2024, Lesco Leasing leased equipment to Quality Services under a finance/sales-type lease designed to earn Lesco a
14% rate of return for providing long-term financing. The lease agreement specified:
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1. FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1).
a. Ten annual payments of $59,000 beginning January 1, 2024, the beginning of the lease and each December 31 thereafter through
2032.
b. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to Lesco was $321,104.
c. The lease qualifies as a finance lease/sales-type lease.
d. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as
required. Payments of $5,000 per year are specified, beginning January 1, 2024. Lesco was to pay this cost as incurred, but lease
payments reflect this expenditure. Also included in the $59,000 payments is an insurance premium of $4,000 providing coverage
for the equipment.
Required:
1. Prepare the appropriate entries for both the lessee and lessor related to the lease on January 1, 2024.
2. Prepare the appropriate entries for both the lessee and lessor related to the lease on December 31, 2024.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Prepare the appropriate entries for both the lessee and lessor related to the lease on January 1, 2024.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate
and final answers to nearest whole dollar.
View transaction list
Journal entry worksheet
<
1 2 3 4
Record the beginning of the lease for Quality Services.
Note: Enter debits before credits.
Date
January 01, 2024
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
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