On January 1, 2025, Crane Animation sold a truck to Cullumber Finance for $35,000 and immediately leased it back. The truck was carried on Crane's books at $29,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Crane at lease-end. The lease requires five equal rental payments of $8,309 at the end of each year (first payment on January 1, 2026). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term.
On January 1, 2025, Crane Animation sold a truck to Cullumber Finance for $35,000 and immediately leased it back. The truck was carried on Crane's books at $29,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Crane at lease-end. The lease requires five equal rental payments of $8,309 at the end of each year (first payment on January 1, 2026). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
answer in text form please (without image), Note: .Every entry should have narration please
Transcribed Image Text:On January 1, 2025, Crane Animation sold a truck to Cullumber Finance for $35,000 and immediately leased it back. The truck was
carried on Crane's books at $29,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to
Crane at lease-end. The lease requires five equal rental payments of $8,309 at the end of each year (first payment on January 1, 2026).
The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease
term.
Prepare Crane'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.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.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