Recording Entries for Operating Lease- Lessee On January 2, 2020, Wayne Inc. signed an eight-year lease for office space for $24,000 annually, with the first payment due immediately. Wayne has the option to renew the lease for an additional four-year period on or before January 2, 2028, at market lease rates at the time of renewal. Wayne intends to evaluate rental options at the time of the option to renew. The remaining economic life of the office is 30 years. Wayne Inc. is not aware of the implicit rate of the lease but has an incremental borrowing rate of 7%. Wayne Inc. paid $1,000 on January 2, 2020, for initial direct lease costs. d. Prepare the entries for Wayne Inc. for years 2020 and 2021, assuming Wayne Inc.'s accounting year ends December 31.
Recording Entries for Operating Lease- Lessee On January 2, 2020, Wayne Inc. signed an eight-year lease for office space for $24,000 annually, with the first payment due immediately. Wayne has the option to renew the lease for an additional four-year period on or before January 2, 2028, at market lease rates at the time of renewal. Wayne intends to evaluate rental options at the time of the option to renew. The remaining economic life of the office is 30 years. Wayne Inc. is not aware of the implicit rate of the lease but has an incremental borrowing rate of 7%. Wayne Inc. paid $1,000 on January 2, 2020, for initial direct lease costs. d. Prepare the entries for Wayne Inc. for years 2020 and 2021, assuming Wayne Inc.'s accounting year ends December 31.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format ?
Transcribed Image Text:Recording Entries for Operating Lease- Lessee
On January 2, 2020, Wayne Inc. signed an eight-year lease for office space for $24,000 annually, with the first payment
due immediately. Wayne has the option to renew the lease for an additional four-year period on or before January 2,
2028, at market lease rates at the time of renewal. Wayne intends to evaluate rental options at the time of the option to
renew. The remaining economic life of the office is 30 years. Wayne Inc. is not aware of the implicit rate of the lease but
has an incremental borrowing rate of 7%. Wayne Inc. paid $1,000 on January 2, 2020, for initial direct lease costs.
d. Prepare the entries for Wayne Inc. for years 2020 and 2021, assuming Wayne Inc.'s accounting year ends December 31.
Account Name
Date
Debit Credit
Jan. 2, 2020
Date
Jan. 2,
2020
Date
Jan. 2, 2020
Date
Dec. 31, 2020
Date
Jan. 2, 2021
Date
Dec. 31, 2021
To record payment of initial direct costs
Account Name
To record lease liability and right-of-use
asset
Account Name
To record lease payment
Account Name
To record lease expense
Account Name
To record lease payment
Account Name
To record lease expense
Debit Credit
Debit Credit
Debit Credit
Debit Credit
Debit Credit
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education