On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The leaserequires three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 ofYear 1 and Year 2). The present value of the three annual lease payments is $51,000, using a 6.003% interest rate. Thelease payment schedule follows.DateJanuary 1, Year 1December 31, Year 1December 31, Year 2View transaction listJournal entry worksheet1(A) BeginningBalance ofLeaseLiability$ 51,00033,00016,9812. Prepare the January 1 journal entry to record the first $18,000 cash lease payment.Note: Enter debits before credits.(B) DebitInterest onLease Liability6.003% X (A)$01,9811,019$ 3,000Record the first lease payment on January 1.DateYear 1 January01+General Journal(C) DebitLeaseLiability (D)(B)$ 18,00016,01916,981$ 51,000DebitCredit(D) CreditCash LeasePayment$ 18,00018,00018,000$ 54,000(E) EndingBalance ofLeaseLiability (A)- (C)$ 33,00016,9810

Lease payments are monthly fees paid to the asset's owner (the lessor) in exchange for the right to…

On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $51,000, using a 6.003% interest rate. The lease payment schedule follows. Date January 1, Year 1 December 31, Year 1 December 31, Year 2 (A) Beginning (B) Debit Balance of Interest on Lease Liability 6.003% X (A) $0 Lease Liability $ 51,000 33,000 16,981 1,981 1,019 $ 3,000 (C) Debit Lease Liability (D) (B) $ 18,000 16,019 16,981 $ 51,000 2. Prepare the January 1 journal entry to record the first $18,000 cash lease payment. (D) Credit Cash Lease Payment $ 18,000 18,000 18,000 $ 54,000 (E) Ending Balance of Lease Liability (A) (C) $ 33,000 16,981 0

On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $51,000, using a 6.003% interest rate. The lease payment schedule follows. Date January 1, Year 1 December 31, Year 1 December 31, Year 2 (A) Beginning (B) Debit Balance of Interest on Lease Liability 6.003% X (A) $0 Lease Liability $ 51,000 33,000 16,981 1,981 1,019 $ 3,000 (C) Debit Lease Liability (D) (B) $ 18,000 16,019 16,981 $ 51,000 2. Prepare the January 1 journal entry to record the first $18,000 cash lease payment. (D) Credit Cash Lease Payment $ 18,000 18,000 18,000 $ 54,000 (E) Ending Balance of Lease Liability (A) (C) $ 33,000 16,981 0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On July 1, 2020, Shroff Company leased a warehouse building under a 10-year lease agreement. The lease requires quarterly lease payments of $4,500. The first lease payment is due on September 30, 2020. The lease was reported as a finance lease using an 8% annual interest rate. a. Prepare the journal entry to record the commencement of the lease on July 1, 2020. b. Prepare the journal entries that would be necessary on September 30 and December 31, 2020. c. Post the entries from parts a and b in their appropriate T-accounts. d. Prepare a financial statement effects template to show the effects template to show the effects of the entries from parts a and b on the balance sheet and income statement.
[The following information applies to the questions displayed below.] On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $51,000, using a 6.003% interest rate. The lease payment schedule follows. Date January 1, Year 1 December 31, Year 1 December 31, Year 2 (A) Beginning Balance of Lease Liability $ 51,000 33,000 16,981 (B) Debit Interest on Lease Liability 6.003% X (A) $0 1,981 1,019 $ 3,000 + (C) Debit Lease Liability (D) (B) $ 18,000 - 16,019 16,981 $ 51,000 (D) Credit Cash Lease Payment $ 18,000 18,000 18,000 $ 54,000 (E) Ending Balance of Lease Liability (A) (C) $ 33,000 16,981 0
Smith, the lessee, signs an eight-year lease agreement on December 31 for the floor of a building that requires annual payments of $70,000, beginning immediately. The residual value of $50,000 is guaranteed to the lessor at the end of the lease term. Smith estimates a residual value of $30,000 at the end of the lease term. Smith is aware of the lessor's implicit rate of interest of 7%. rate of interest of 7% Prenare the leccor's inurnal entries on December 31 to record the (1) leace receivable and (2) receint of the first navment assuming that the lease is properly classified as a sales-type lease. The carrying value of the equipment is $450,000 at the commencement of the lease. N Note: Round your answers to the nearest whole dollar. = Nare' koung your answers in the nearest wanie nnuar Date TIDEL. SI 1) Dec. 31 2) Dec. 31 Account Name To derecognize asset and record investment in lease To record receipt of lease payment ======== Dr. Cr.
On January 1, 2021, Green Co. recorded a right-of-use asset of $270,360 in an operating lease. The lease calls for ten annual payments of $40,000 at the beginning of each year. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset at December 31, 2021, will be:
On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: • The lease is noncancelable and has a term of 8 years. • The annual rentals are $39,200, payable at the beginning of each year. • The interest rate implicit in the lease is 11%. • Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for $1 at the end of the lease term, December 31, 2026. • The cost of the equipment to the lessor is $145,500, and the fair value is approximately $223,900. • Ballieu incurs no material initial direct costs. • It is probable that Ballieu will collect the lease payments. • Ballieu estimates that the fair value is expected to be significantly greater than $1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of $39,200 discounted at…
Core Co. leased a piece of manufacturing equipment from E-So Co. with the following terms: Annual lease payment: $990,000 Term of lease: 5 years Interest rate: 4% Lease commences on January 1, 2023 Payments are made on December 31 of each year in the lease term For parts a and b: a. Prepare journal entries to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as a finance lease. b. Prepare journal entries to show the effects for Core Co. for January 1, 2023-December 31, 2024, if the lease is classified as an operating lease. Operating Lease Finance Lease a. Finance lease: Date Jan. 1, 2023 Account To record the start of the finance lease. Dec. 31, 2023 To record the amortization of leased asset. Dec. 31, 2023 Dec. 31, 2024 Dec. 31, 2024 To record the lease payment. To record the amortization of leased asset. To record the lease payment. > > > > > > > > > > Debit Credit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Prepare all the journal entries for Scuppermong for Years 1 and 2.
On January 1 of Year 1, Wayne Inc. signed an eight-year lease for office space for $48,000 annually due each January 1, with the first payment due immediately. Wayne has the option to renew the lease for an additional four-year period on or before January 1 of Year 9, at market lease rates at the time of renewal. The remaining economic life of the office is 30 years. Wayne Inc. is not aware of the implicit rate of the lease but has an incremental borrowing rate of 7%. Wayne Inc. paid $2,000 on January 1 of Year 1 for initial direct costs. Required a. How would Wayne Inc. classify the lease? ◆