payments.) c. Prepare the journal entry or entries, with explanations, that Ludwick should record on December 31, 2021.
Q: On June 30, 2024, Clark, Incorporated leased warehouse equipment from Woodward, Incorporated. The…
A: The present value of lease payments is determined by discounting, which is a method that involves…
Q: 1. Pretax amount of net receivable 2. Pretax amount of interest revenue
A: A lease is defined as a contractual agreement between two organizations where one of them provides…
Q: On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from Builders, Inc. The lease…
A: Given information is : On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from…
Q: On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from Builders, Inc. The lease…
A: Lease is an agreement between lessor and lessee where lessor gives right to use asset to lessee in…
Q: December 31, with the first payment on June 30, 2024. Geo calculate lease payment amounts.…
A: Lease:A lease is a written agreement where one party allows the another party to use his/her assets…
Q: Blossom Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning…
A: Blossom Steel Company records the leased equipment and related liabilities on December 31, 2025,…
Q: Accounting Sandhill Company, a machinery dealer, leased a machine to Dexter Corporation on January…
A: Lease: - A lease is an agreement between two parties i.e., a lessor and a lessee. Lessor allows…
Q: Pearl Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning…
A: A lease is defined as a contractual agreement incorporated between two business entities where one…
Q: On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing…
A: A lease is a type of financing where the lessee gets the assets on rent from the lessor. The lessor…
Q: Stovall Industries leased equipment to Arnett Manufacturing on July 1, 2019, for a ten-year period…
A: Calculate the profit on sales The present value of a rental payment $350,000 Less: Cost of…
Q: On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing…
A: LeasesThe agreement made between the two parties for taking the property or asset. The asset is…
Q: Waterway Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning…
A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period…
Q: Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The…
A: a.Compute the amount of the lease receivable.
Q: On December 31, 2019, Lewis Corp. (Lewis), a publicly accountable entity, leased a tractor from Jade…
A: Right of Use Asset-Lease: It is a right of lessee to utilize a leased item(property or equipment)…
Q: Sunland Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The…
A: A lease is a type of legal agreement where the lessor offers the lessee the right to use the asset.…
Q: Q1 What is the value of the lease liability at the inception of the lease on 1 January 2019 in…
A: The value of the lease liability at the inception of the lease on 1 January 2019 is calculated by…
Q: On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing…
A: Lease is a agreement between a lessor and a lessee where the lessor allows the lessee to use assets…
Q: On June 30, 2021, Hercule, Inc. leased warehouse equipment from Marble, Inc. The lease agreement…
A: Solution: Present value of lease payment = Annual lease payments * PVAD of 1 at i for n periods…
Q: Hornstein Finance Co. (lessor) leased an asset on January 1, 2019, to HPQ Fishing (lessee). The…
A: Lease Payment: 60,000 Number of lease years: 8 Implicit interest rate: 7% Asset estimated value:…
Q: On December 31, 2020, the lessor company leases equipment to the lessee company with 8 equal annual…
A: When an asset is provided by the lessor to the lessee who requires that particular asset, then this…
Q: On January 1, 2020, Warden Industries signed a ten-year noncancelable lease for machinery. Warden is…
A: Lease is the contract where asset owner(lessor) provides the asset to another person who uses the…
Q: payments of $53,000 are to be made at the beginning of each lease year (December 31). The interest…
A: A journal entry is an accounting entry which is used to record a business recorded in the accounting…
Q: On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing…
A: Semiannual lease payment = $464,149Total semiannual payments = 4*2 = 8Incremental borrowing rate =…
Q: Haystack Inc. manufactures machinery used in the mining industry. On January 2, 2025 it leased…
A: The rate implicit in the lease is the interest rate charged by the lessor in the lease agreement.…
Q: On December 31, 2020, Roque Company leased machinery with a fair value of $1,260,000 from Sage…
A: Particulars Amount $ Lease rentals (A) 240000 Present value of annuity due of 1…
Q: On June 30, 2018, Georgia-Atlantic, Inc., leased warehouse equipment from Builders, Inc. The lease…
A: An agreement of contract that is prepared to transfer the right to use the resources for a…
Q: On January 1, 2021, Worcester Construction leased International Harvester equipment from Newton…
A: "Since you have asked a question with sub-parts more than three, as per guidelines, the first three…
Q: On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing…
A: Leasing equipment offers businesses financial flexibility by allowing them to use assets without…
Q: On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation.…
A: calculation of present value , pretax amount of liability, right of use assets, interest expenses…
Q: On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation.…
A: Lease is a financial arrangement in which one party agree to let the other party use its asset. In…
Q: 1. Determine the present value of the lease payments on June 30, 2024 that Georgia-Atlantic uses to…
A: Lease is form of a contractual agreement between two parties where lessor (owner of the asset)…
Q: On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing…
A: Present value of lease payments = Annual lease payments * PVAD of 1 at I for n periodsPretax amount…
Q: On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing…
A: Semi Annual Lease Payments $ 4,68,683Lease Term5 yearsLease Period10Incremental Borrowing Rate Rate…
Q: Blossom Company, a machinery dealer, leased a machine to Crane Corporation on January 1, 2025. The…
A: A lease is an agreement that takes place between the lessor and the lessee. The lessor is the one…
Q: Vaughn Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning…
A: The right to use an asset is the right of the lessee to use an asset over the life of the lease.…
Q: andhill Company, a machinery dealer, leased a machine to Wildhorse Corporation on January 1, 2025.…
A: Lease receivables are an important aspect of lessor accounting because they reflect the financial…
Q: Sheridan Company, a machinery dealer, leased a machine to Sunland Corporation on January 1, 2025.…
A: A lessee's lease receivable is determined in the same way as the lessee's lease liability: it is…
Q: Ivanhoe Company, a machinery dealer, leased a machine to Oriole Corporation on January 1, 2025. The…
A: A lease agreement is entered into between a lessee and a lessor for the asset. The Lessee pays the…
Q: Sunland Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning…
A: The interest rate a borrower must pay to borrow money is called the borrowing rate. Before taking…
Q: On June 30, 2024, Georgia-Atlantic, Incorporated leased warehouse equipment from IC Leasing…
A: Pretax amount of net receivables = Lease receivables + Interest revenue - Lease paymentsInterest…
Q: 1. Determine the present value of the lease payments on June 30, 2024 that Georgia-Atlantic uses to…
A: The present value of lease payments is the current value of all future lease payments discounted to…
Q: On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from IC Leasing Corporation. The…
A: Lease payments refer to the regular payments made by a lessee (the person or entity leasing an…
Q: Sheffield Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning…
A: A journal entry is the first step—and an essential function—of the accounting process. Journal…
Q: On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from Builders, Inc. The lease…
A: 1: Semiannual lease payment to be received = $583,573 Total semiannual payments to be received =…
Q: On January 1, 2023, Wynn Manufacturing leased a floor of a building for use in its North American…
A: The objective of the question is to determine the type of lease for the lessee, Wynn Manufacturing,…
Q: . How much is the balance of the lease liability as of December 31, 2021?
A: Variable lease payment linked to the index is considered for lease liability calculation. Hence we…
Ludwick Steel SA, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2019. Annual rental payments of €40,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 6%; Ludwick's incremental borrowing rate is 8%. Ludwick is unaware of the rate being used by the lessor. At the end of the lease, Ludwick has the option to buy the equipment for €5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no residual value. Ludwick uses the straight-line method of
Present value of an annuity-due of 1 for 5 periods at 8% is 4.31213.
Present value of an annuity-due of 1 for 5 periods at 6% is 4.46511.
Present value of a single-sum of 1 for 5 periods at 8% is 0.68058.
Instructions
a. Prepare the journal entries that Ludwick should record on December 31, 2019.
b. Prepare the
c. Prepare the journal entry or entries, with explanations, that Ludwick should record on December 31, 2021.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
- Pharoah Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $31,296 at the beginning of each year. The first payment is received on January 1, 2020. Pharoah had purchased the machine during 2016 for $116,000. Collectibility of lease payments by Pharoah is probable. Pharoah set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Pharoah at the termination of the lease. Compute the amount of the lease receivable Prepare all necessary journal entries for Pharoah for 2020. Suppose the collectibility of the lease payments was not probable for Pharoah. Prepare the necessary journal entry for the company in 2020. Suppose at the end of the lease term, Pharoah receives the asset and determines that it actually has a fair value of $1,170instead of the anticipated residual value of $0. Record the…Cullumber Company, a machinery dealer, leased a machine to Ivanhoe Corporation on January 1, 2025. The lease is for an 8-year period and requires equal annual payments of $30,840 at the beginning of each year. The first payment is received on January 1, 2025. Cullumber had purchased the machine during 2024 for $103,000. Collectibility of lease payments by Cullumber is probable. Cullumber set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Cullumber at the termination of the lease. Suppose the collectibility of the lease payments was not probable for Cullumber. Prepare the necessary journal entry for the company in 2025. (List debit entry before credit entry. Credit account titles are automatically indented when 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.) Date Account Titles and Explanation 1/1/25 (d) * Your…On June 30, 2021, Georgia-Atlantic, Inc. leased warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a three-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $3 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the present value of the lease payments at June 30, 2021 that Georgia-Atlantic uses to record the right-of-use asset and lease liability. 2. What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2021? 3. What pretax amounts related to the lease would…
- Whispering Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $54,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 6%; Whispering’s incremental borrowing rate is 8%. Whispering is unaware of the rate being used by the lessor. At the end of the lease, Whispering has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Whispering uses the straight-line method of depreciation on similar owned equipment.Riverbed Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $53,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Riverbed’s incremental borrowing rate is 9%. Riverbed is unaware of the rate being used by the lessor. At the end of the lease, Riverbed has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Riverbed uses the straight-line method of depreciation on similar owned equipment. A)Prepare the journal entries, that Riverbed should record on December 31, 2020.Blue Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $57,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Blue’s incremental borrowing rate is 9%. Blue is unaware of the rate being used by the lessor. At the end of the lease, Blue has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Blue uses the straight-line method of depreciation on similar owned equipment.Click here to view factor tables. (a) Prepare the journal entries, that Blue should record on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.…
- Sheffield Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $53,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Sheffield's incremental borrowing rate is 9%. Sheffield is unaware of the rate being used by the lessor. At the end of the lease, Sheffield has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Sheffield uses the straight-line method of depreciation on similar owned equipment. Click here to view factor tables.On January 1, 2023, Wynn Manufacturing leased a floor of a building for use in its North American operations from Easymoney Bank. The 9-year, noncancellable lease requires annual lease payments of $12,000, beginning January 1, 2023, and at each January 1 thereafter through 2031.The lease agreement does not transfer ownership, nor does it contain a purchase option. The floor of the building has a fair value of $85,000 and an estimated remaining life of 10 years. Easymoney Bank's implicit rate of 10% is known to Wynn.At what amount is the lease liability recorded at lease commencement? Group of answer choices $85,735 $108,000 $76,019 $81,108On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $576,798 over a five-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 12%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $4.5 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:1. Determine the present value of the lease payments at June 30, 2021 that Georgia-Atlantic uses to record the right-of-use asset and lease liability.2. What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2021?3. What pretax amounts related to the lease would…
- On December 31, 2024, Sunland Company leased machinery from Sheridan Corporation for an agreed-upon lease term of 3 years. Sunland agreed to make annual lease payments of $20,000, beginning on December 31, 2024. The expected residual value of the machinery at the end of the lease term is $10,000, though Sunland does not guarantee any residual value to Sheridan. What amount will Sunland record as its lease liability on December 31, 2024, if its incremental borrowing rate is 4% and the implicit rate of the lease is unknown? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.) Click here to view factor tables. Lease liability $On June 30, 2024, Blue, Incorporated leased a machine from Big Leasing Corporation. The lease agreement qualifies as a finance lease and calls for Blue to make semiannual lease payments of $212,190 over a four-year lease term, payable each June 30 and December 31, with the first payment on June 30, 2024. Blue’s incremental borrowing rate is 10%, the same rate Big uses to calculate lease payment amounts. Determine the present value of the lease payments on June 30, 2024, that Blue uses to record the right-of-use asset and lease liability. What would be the amounts related to the lease that Blue would report in its balance sheet at December 31, 2024? (Ignore taxes.) What would be the amounts related to the lease that Blue would report in its income statement for the year ended December 31, 2024? (Ignore taxes.)Sunland Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $29,928 at the beginning of each year. The first payment is received on January 1, 2020. Sunland had purchased the machine during 2019 for $150,000. Collectibility of lease payments by Sunland is probable. Sunland set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Sunland at the termination of the lease. Click here to view factor tables. (a) Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to O decimal places e.g. 5,275.) Amount of the lease receivable $
