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On January 1, 2024, QuickStream Communications leased telephone equipment from Digium, Incorporated Digium's cash selling price for the equipment is $2,177,630. • The lease agreement specifies six annual payments of $500,000 beginning December 31, 2024, and on each December 31 thereafter through 2029. • The six-year lease is equal to the estimated useful life of the equipment. ⚫ The contract specifies that lease payments for each year will increase by the higher of (a) the increase in the Consumer Price Index for the preceding year or (b) 3%. • The CPI at the beginning of the lease is 130. Digium routinely leases equipment to other firms. • The interest rate in these lease arrangements is 10%. 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) Required: Prepare the appropriate journal entries for QuickStream to record the lease at its beginning date of 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 the nearest whole dollar. > Answer is complete but not entirely correct. No Date General Journal 1 January 01, 2024 Right-of-use asset Lease payable Debit Credit 2,328,459 x 2,328,459 x

On January 1, 2024, QuickStream Communications leased telephone equipment from Digium, Incorporated Digium's cash selling price for the equipment is $2,177,630. • The lease agreement specifies six annual payments of $500,000 beginning December 31, 2024, and on each December 31 thereafter through 2029. • The six-year lease is equal to the estimated useful life of the equipment. ⚫ The contract specifies that lease payments for each year will increase by the higher of (a) the increase in the Consumer Price Index for the preceding year or (b) 3%. • The CPI at the beginning of the lease is 130. Digium routinely leases equipment to other firms. • The interest rate in these lease arrangements is 10%. 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) Required: Prepare the appropriate journal entries for QuickStream to record the lease at its beginning date of 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 the nearest whole dollar. > Answer is complete but not entirely correct. No Date General Journal 1 January 01, 2024 Right-of-use asset Lease payable Debit Credit 2,328,459 x 2,328,459 x

Intermediate Accounting: Reporting And Analysis
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 12P: Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease...
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On January 1, 2024, QuickStream Communications leased telephone equipment from Digium, Incorporated Digium's cash selling price for the equipment is $2,177,630. • The lease agreement specifies six annual payments of $500,000 beginning December 31, 2024, and on each December 31 thereafter through 2029. • The six-year lease is equal to the estimated useful life of the equipment. ⚫ The contract specifies that lease payments for each year will increase by the higher of (a) the increase in the Consumer Price Index for the preceding year or (b) 3%. • The CPI at the beginning of the lease is 130. Digium routinely leases equipment to other firms. • The interest rate in these lease arrangements is 10%. 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) Required: Prepare the appropriate journal entries for QuickStream to record the lease at its beginning date of 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 the nearest whole dollar. > Answer is complete but not entirely correct. No Date General Journal 1 January 01, 2024 Right-of-use asset Lease payable Debit Credit 2,328,459 x 2,328,459 x
Transcribed Image Text:On January 1, 2024, QuickStream Communications leased telephone equipment from Digium, Incorporated Digium's cash selling price for the equipment is $2,177,630. • The lease agreement specifies six annual payments of $500,000 beginning December 31, 2024, and on each December 31 thereafter through 2029. • The six-year lease is equal to the estimated useful life of the equipment. ⚫ The contract specifies that lease payments for each year will increase by the higher of (a) the increase in the Consumer Price Index for the preceding year or (b) 3%. • The CPI at the beginning of the lease is 130. Digium routinely leases equipment to other firms. • The interest rate in these lease arrangements is 10%. 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) Required: Prepare the appropriate journal entries for QuickStream to record the lease at its beginning date of 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 the nearest whole dollar. > Answer is complete but not entirely correct. No Date General Journal 1 January 01, 2024 Right-of-use asset Lease payable Debit Credit 2,328,459 x 2,328,459 x
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