Recording Finance Lease Journal Entries- Guaranteed Residual Value Smith, the lessee, signs an 8-year lease agreement for a floor of a building on December 31 that requires annual payments of $28,000, beginning immediately. The residual value of $20,000 is guaranteed to the lessor at the end of the lease term. Smith estimates a residual of $12,000 at the end of the lease term. Smith is aware of the lessor's implicit rate of interest of 7%. Record Smith's journal entries on December 31, assuming that the lease is properly classified as a finance lease • Note: Round your answers to the nearest whole dollar. Date Dec. 31 Right-of-Use Asset Lease Liability To record asset and liability. Account Name Dec. 31 Lease Liability Cash To record cash lease payment Dr. 376,424 * 0✔ 185,884 * 0✔ Cr. 0 190,540 * 0✔ 0 x
Recording Finance Lease Journal Entries- Guaranteed Residual Value Smith, the lessee, signs an 8-year lease agreement for a floor of a building on December 31 that requires annual payments of $28,000, beginning immediately. The residual value of $20,000 is guaranteed to the lessor at the end of the lease term. Smith estimates a residual of $12,000 at the end of the lease term. Smith is aware of the lessor's implicit rate of interest of 7%. Record Smith's journal entries on December 31, assuming that the lease is properly classified as a finance lease • Note: Round your answers to the nearest whole dollar. Date Dec. 31 Right-of-Use Asset Lease Liability To record asset and liability. Account Name Dec. 31 Lease Liability Cash To record cash lease payment Dr. 376,424 * 0✔ 185,884 * 0✔ Cr. 0 190,540 * 0✔ 0 x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Recording Finance Lease Journal Entries- Guaranteed Residual Value
Smith, the lessee, signs an 8-year lease agreement for a floor of a building on
December 31 that requires annual payments of $28,000, beginning immediately.
The residual value of $20,000 is guaranteed to the lessor at the end of the lease
term. Smith estimates a residual of $12,000 at the end of the lease term. Smith is
aware of the lessor's implicit rate of interest of 7%. Record Smith's journal entries
on December 31, assuming that the lease is properly classified as a finance lease.
• Note: Round your answers to the nearest whole dollar.
Account Name
Date
Dec. 31 Right-of-Use Asset
Lease Liability
To record asset and liability.
Dec. 31 Lease Liability
Cash
To record cash lease payment
Dr.
376,424 *
0✔
185,884 *
0
Cr.
190,540 *
0
0 x](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fac06c900-dc52-42b8-b0c3-6a4d7bd22308%2Ffc2b3b7c-e93c-4683-91e9-7ef13407f30f%2Fu0rjjpf_processed.png&w=3840&q=75)
Transcribed Image Text:Recording Finance Lease Journal Entries- Guaranteed Residual Value
Smith, the lessee, signs an 8-year lease agreement for a floor of a building on
December 31 that requires annual payments of $28,000, beginning immediately.
The residual value of $20,000 is guaranteed to the lessor at the end of the lease
term. Smith estimates a residual of $12,000 at the end of the lease term. Smith is
aware of the lessor's implicit rate of interest of 7%. Record Smith's journal entries
on December 31, assuming that the lease is properly classified as a finance lease.
• Note: Round your answers to the nearest whole dollar.
Account Name
Date
Dec. 31 Right-of-Use Asset
Lease Liability
To record asset and liability.
Dec. 31 Lease Liability
Cash
To record cash lease payment
Dr.
376,424 *
0✔
185,884 *
0
Cr.
190,540 *
0
0 x
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
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
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
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
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education