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Prepare Pharoah' 2025 journal entries, assuming the company uses straight-line depreciation and no salvage value. ( before credit entries If no entrcs mauled

Prepare Pharoah' 2025 journal entries, assuming the company uses straight-line depreciation and no salvage value. ( before credit entries If no entrcs mauled

FINANCIAL ACCOUNTING
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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Oriole Corporation agrees on January 1, 2025, to lease equipment from Pharoah, Inc. for 3 years. The lease calls for annual lease payments of $22,000 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. Assume that for Pharoah, Inc., the lessor, the collectibility of the lease payments is probable, and the fair value and cost of the equipment is $172,000. Prepare Pharoah' 2025 journal entries, assuming the company uses straight-line depreciation and no salvage value. (List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record Journal entries in the order presented in the problem.) Account Titles and Explanation Date 1/1/25 12/31/25 12/31/25 Cash Lease Receivable Lease Receivable Lease Revenue (To record the recognition of the revenue each period) Depreciation Expense Accumulated Depreciation Leased Equipment (To record depreciation expense on the leased equipment) Debit 22,000 22,000 17,200 Credit 22,000 22,000 17,200
Transcribed Image Text:Oriole Corporation agrees on January 1, 2025, to lease equipment from Pharoah, Inc. for 3 years. The lease calls for annual lease payments of $22,000 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. Assume that for Pharoah, Inc., the lessor, the collectibility of the lease payments is probable, and the fair value and cost of the equipment is $172,000. Prepare Pharoah' 2025 journal entries, assuming the company uses straight-line depreciation and no salvage value. (List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record Journal entries in the order presented in the problem.) Account Titles and Explanation Date 1/1/25 12/31/25 12/31/25 Cash Lease Receivable Lease Receivable Lease Revenue (To record the recognition of the revenue each period) Depreciation Expense Accumulated Depreciation Leased Equipment (To record depreciation expense on the leased equipment) Debit 22,000 22,000 17,200 Credit 22,000 22,000 17,200
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