Question 1. Pearl Leasing Company agrees to lease equipment to Martinez Corporation on January 1, 2025. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2 The cost of the machinery is $541,000, and the fair value of the asset on January 1, 2025, is $760,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $45,000, Martinez estimates that the expected residual value at the end of the lease term will be $45,000. Martinez amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2025. 5. The collectibility of the lease payments is probable. 6. Pearl desires a 10% rate of return on its investments. Martinez's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. Annual rental payment is 137605 Present value of minimum lease payment is 719748 a. compute the value of lease liability at lease commencement Question 2. Listed below are selected transactions for the current year ending December 31. 1. On December 5, the store received $550 from the Selig Players as a deposit to be returned after certain furniture to be used in stage production was returned on January 15. 2. During December, cash sales totaled $810,600, which includes the 5% sales tax that must be remitted to the state by the fifteenth day of the following month. 3. On December 10, the store purchased for cash three delivery trucks for $121,700. The trucks were purchased in a state that applies a 5% sales tax. 4. The store sold 27 gift cards for $100 per card. At year-end, 22 of the gift cards are redeemed. Metlock expects three of the cards to expire unused. a. record all journal entries and adjusting entries
Question 1. Pearl Leasing Company agrees to lease equipment to Martinez Corporation on January 1, 2025. The following information relates to the lease agreement.
1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years.
2 The cost of the machinery is $541,000, and the fair value of the asset on January 1, 2025, is $760,000.
3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $45,000, Martinez estimates that the expected residual value at the end of the lease term will be $45,000. Martinez amortizes all of its leased equipment on a straight-line basis.
4. The lease agreement requires equal annual rental payments, beginning on January 1, 2025.
5. The collectibility of the lease payments is probable.
6. Pearl desires a 10% rate of return on its investments. Martinez's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown.
Annual rental payment is 137605
Present value of minimum lease payment is 719748
a. compute the value of lease liability at lease commencement
Question 2. Listed below are selected transactions for the current year ending December 31.
1. On December 5, the store received $550 from the Selig Players as a deposit to be returned after certain furniture to be used in stage production was returned on January 15.
2. During December, cash sales totaled $810,600, which includes the 5% sales tax that must be remitted to the state by the fifteenth day of the following month.
3. On December 10, the store purchased for cash three delivery trucks for $121,700. The trucks were purchased in a state that applies a 5% sales tax.
4. The store sold 27 gift cards for $100 per card. At year-end, 22 of the gift cards are redeemed. Metlock expects three of the cards to expire unused.
a. record all journal entries and adjusting entries
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
