Question 6 Sheridan Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2020, that requires 6 annual payments of $31,700 each, beginning September 1, 2020. In addition, Sheridan guarantees the lessor a residual value of $21,600 at lease end. The equipment has a useful life of seven years. Assume an interest rate of 7%. (Use tables below, a financial calculator, or Excel functions.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Prepare a schedule contrasting the journal entries prepared using a guaranteed residual value with those using an unguaranteed residual value. Include in your schedule entries on August 31, 2021, for the year-end accrual of interest in the lease obligation and the recording of annual depreciation expense using the straight-line method and assuming no residual
Question 6 Sheridan Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2020, that requires 6 annual payments of $31,700 each, beginning September 1, 2020. In addition, Sheridan guarantees the lessor a residual value of $21,600 at lease end. The equipment has a useful life of seven years. Assume an interest rate of 7%. (Use tables below, a financial calculator, or Excel functions.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Prepare a schedule contrasting the journal entries prepared using a guaranteed residual value with those using an unguaranteed residual value. Include in your schedule entries on August 31, 2021, for the year-end accrual of interest in the lease obligation and the recording of annual depreciation expense using the straight-line method and assuming no residual
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Question 6
Sheridan Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2020, that requires 6 annual payments of $31,700 each, beginning September 1,
2020. In addition, Sheridan guarantees the lessor a residual value of $21,600 at lease end. The equipment has a useful life of seven years. Assume an interest rate of 7%. (Use tables
below, a financial calculator, or Excel functions.)
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
Prepare a schedule contrasting the journal entries prepared using a guaranteed residual value with those using an unguaranteed residual value. Include in your schedule entries on
August 31, 2021, for the year-end accrual of interest in the lease obligation and the recording of annual depreciation expense using the straight-line method and assuming no residual
value. (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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
Account Titles and Explanation
Capitalization of lease Sept. 1, 2020:
August 31, 2021:
(To record interest expense.)
(To record depreciation.)
Guaranteed Residual Value
Credit
Debit
Unguaranteed Residual Value
Credit
Debit
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