Prepare Carla Vista' journal entries on January 1, 2025 (commencement of the operating lease), and on December 3 itles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entr inal answers to "0" decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation Debit

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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Carla Vista Corporation agrees on January 1, 2025, to lease equipment from Sandhill, Inc. for 3 years. The lease calls for annual lease payments of $10,500 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option,
and is not a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment.
Prepare Carla Vista' journal entries on January 1, 2025 (commencement of the operating lease), and on December 31, 2025. Assume the implicit rate used by the lessor is 6%, and this is known to Carla Vista. (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 "0" decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)
Click here to view factor tables.
Date
Account Titles and Explanation
(To record lease liability)
(To record lease payment)
Debit
||||
Credit
I
Transcribed Image Text:Carla Vista Corporation agrees on January 1, 2025, to lease equipment from Sandhill, Inc. for 3 years. The lease calls for annual lease payments of $10,500 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Prepare Carla Vista' journal entries on January 1, 2025 (commencement of the operating lease), and on December 31, 2025. Assume the implicit rate used by the lessor is 6%, and this is known to Carla Vista. (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 "0" decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation (To record lease liability) (To record lease payment) Debit |||| Credit I
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