PROBLEMS Problem 10-1 (AICPA Adapted) On January 1, 2020, Mixx Company entered into a lease for a new warehouse. Lease payments are P800,000 a year for 5 years, payable in advance starting January 1, 2020. The warehouse has an estimated life of 10 years. The entity paid initial direct cost of P100,000 on January 1, 2020. The realty taxes of P40,000 a year are to be paid by the entity The lease provides for neither transfer of title to the lesses upon expiration of the lease term nor a purchase option. The underlying asset is reverted to the lessor at the expiration of the lease term. The interest rate implicit in the lease is 10%. The relevant present value factors are: PV of an ordinary annuity of 1 at 10% for 5 periods PV of an annuity of 1 in advance at 10 % for 5 periods 3.79 4.17 Required: 1. Prepare journal entries on the books of Mixx Company for 2020 and 2021.

PROBLEMS Problem 10-1 (AICPA Adapted) On January 1, 2020, Mixx Company entered into a lease for a new warehouse. Lease payments are P800,000 a year for 5 years, payable in advance starting January 1, 2020. The warehouse has an estimated life of 10 years. The entity paid initial direct cost of P100,000 on January 1, 2020. The realty taxes of P40,000 a year are to be paid by the entity The lease provides for neither transfer of title to the lesses upon expiration of the lease term nor a purchase option. The underlying asset is reverted to the lessor at the expiration of the lease term. The interest rate implicit in the lease is 10%. The relevant present value factors are: PV of an ordinary annuity of 1 at 10% for 5 periods PV of an annuity of 1 in advance at 10 % for 5 periods 3.79 4.17 Required: 1. Prepare journal entries on the books of Mixx Company for 2020 and 2021.

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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