On January 1, 2025, Carla Vista Animation sold a truck to Sandhill Finance for $41,000 and immediately leased it back. The truck was carried on Carla Vista's books at $34,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Carla Vista at lease-end. The lease requires five equal rental payments of $9,470 at the end of each year (first payment on January 1, 2026). The appropriate rate of interest is 5%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Carla Vista's 2025 journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when
On January 1, 2025, Carla Vista Animation sold a truck to Sandhill Finance for $41,000 and immediately leased it back. The truck was carried on Carla Vista's books at $34,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Carla Vista at lease-end. The lease requires five equal rental payments of $9,470 at the end of each year (first payment on January 1, 2026). The appropriate rate of interest is 5%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Carla Vista's 2025 journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Vishnu
Transcribed Image Text:-
Your answer is partially correct.
On January 1, 2025, Carla Vista Animation sold a truck to Sandhill Finance for $41,000 and immediately leased it back. The truck was
carried on Carla Vista's books at $34,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not
transfer to Carla Vista at lease-end. The lease requires five equal rental payments of $9,470 at the end of each year (first payment on
January 1, 2026). The appropriate rate of interest is 5%, the truck has a useful life of 5 years, with no expected residual value at the end
of the lease term.
Prepare Carla Vista's 2025 journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when
the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For
calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275.
Record journal entries in the order presented in the problem.)
Click here to view factor tables.
Date
1/1/25
12/31/25
Account Titles and Explanation
eTextbook
Cash
Trucks
Cash
Lease Revenue
eTextbook and Media
Debit
41000
9470
Credit
41000
9470
Assistance Used
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