Prepare an amortization table for the five-year term of the lease.Prepare journal entries in the books of Generous, Inc. for years 2022 and 2023 to record all transactions relating to the lease.Prepare the journal entry at the end of the lease term to record the transfer of the leased automobiles to the lessor. 4. On January 1, 2022, Generous, Inc. leasedtwo automobiles for executive use. Thelease requires Generous to make five annualpayments of P260,000 beginning January 1,2022. At the end of the lease term,December 31, 2026, Generous guaranteesthat the residual value of the automobileswill total P200,000. The property reverts tothe lessor at the end of the lease term. Theestimated useful life of the automobiles is 6years and Generous uses straight-linemethod for all its assets. Generous'incremental borrowing rate is 10%. Theinterest rate implicit in the lease, which isknown to Generous, Inc., is 9%.

A journal entry is a form of accounting entry that is used to report a business transaction in a…

Answered: Prepare an amortization table for the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Prepare an amortization table for the five-year term of the lease.
Prepare journal entries in the books of Generous, Inc. for years 2022 and 2023 to record all transactions relating to the lease.
Prepare the journal entry at the end of the lease term to record the transfer of the leased automobiles to the lessor.

4. On January 1, 2022, Generous, Inc. leased
two automobiles for executive use. The
lease requires Generous to make five annual
payments of P260,000 beginning January 1,
2022. At the end of the lease term,
December 31, 2026, Generous guarantees
that the residual value of the automobiles
will total P200,000. The property reverts to
the lessor at the end of the lease term. The
estimated useful life of the automobiles is 6
years and Generous uses straight-line
method for all its assets. Generous'
incremental borrowing rate is 10%. The
interest rate implicit in the lease, which is
known to Generous, Inc., is 9%.

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