Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2025 and 2026. The lessor's accounting period ends on December 31. Reversing entries are not used by Mooney. (List all debit entries before credit entries. 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. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 5/1/25 Lease Receivable 5/1/25 Cost of Goods Sold Sales Revenue Inventory (To record the lease) Cash Lease Receivable 12/31/25 (To record lease payment) Lease Revenue Interest Revenue 5/1/26 Cash Lease Receivable Interest Revenue 12/31/26 Lease Revenue Interest Revenue Debit 91,000 i 65,000 20,471.94 3,761.49 20,471.94 2,970.58 Cred ☐ ☐
Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2025 and 2026. The lessor's accounting period ends on December 31. Reversing entries are not used by Mooney. (List all debit entries before credit entries. 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. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation 5/1/25 Lease Receivable 5/1/25 Cost of Goods Sold Sales Revenue Inventory (To record the lease) Cash Lease Receivable 12/31/25 (To record lease payment) Lease Revenue Interest Revenue 5/1/26 Cash Lease Receivable Interest Revenue 12/31/26 Lease Revenue Interest Revenue Debit 91,000 i 65,000 20,471.94 3,761.49 20,471.94 2,970.58 Cred ☐ ☐
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Morgan Leasing Company signs an agreement on January 1, 2025, to lease equipment to Cole Company. The following information
relates to this agreement.
The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6
years.
The cost of the asset to the lessor is $245,000. The fair value of the asset at January 1,2025 , is $245,000.
The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of
$24,335, none of which is guaranteed.
The agreement requires equal annual rental payments, beginning on January 1, 2025.
Collectibility of the lease payments by Morgan is probable.
Transcribed Image Text:Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this
lease for the years 2025 and 2026. The lessor's accounting period ends on December 31. Reversing entries are not used by
Mooney. (List all debit entries before credit entries. 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. Round answers to 2 decimal places,
e.g. 5,275.15. Record journal entries in the order presented in the problem.)
Date
Account Titles and Explanation
5/1/25
Lease Receivable
5/1/25
Cost of Goods Sold
Sales Revenue
Inventory
(To record the lease)
Cash
Lease Receivable
12/31/25
(To record lease payment)
Lease Revenue
Interest Revenue
5/1/26
Cash
Lease Receivable
Interest Revenue
12/31/26
Lease Revenue
Interest Revenue
Debit
91,000 i
65,000
20,471.94
3,761.49
20,471.94
2,970.58
Cred
☐ ☐
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