Recording Revenue Under Different Repurchase Agreements On January 1, 2020, Miller Inc. sells equipment to Smith Inc. for $132,000. As stipulated in the revenue contract, Miller Inc. will buy back the equipment on December 31, 2020, for $141,240. The relevant interest rate is 7% a. Prepare the seller’s journal entry on January 1, 2020. Date Account Name Dr. Cr. Jan. 1, 2020 Answer Answer Answer Answer Answer Answer b. Prepare the seller’s journal entry on December 31, 2020. Date Account Name Dr. Cr. Dec. 31, 2020 Answer Answer Answer Answer Answer Answer To recognize interest. Dec. 31, 2020 Answer Answer Answer Answer Answer Answer To record payment. c. Assume instead that Miller has the option to buy back the equipment and the fair value of the equipment is expected to decline through 2020. How would the answers to parts a and b change (if at all)? Date Account Name Dr. Cr. Jan. 1, 2020 Answer Answer Answer Answer Answer Answer Dec. 31, 2020 Answer Answer Answer Answer Answer Answer To recognize interest. Dec. 31, 2020 Answer Answer Answer Answer Answer Answer To record payment. d. Assume instead that Smith has the option to require Miller to buy back the equipment after one year for $141,240 (an amount greater than the expected market value of the equipment at that time). How would the answers to parts a and b change (if at all)? Date Account Name Dr. Cr. Jan. 1, 2020 Answer Answer Answer Answer Answer Answer Dec. 31, 2020 Answer Answer Answer Answer Answer Answer To record interest. Dec. 31, 2020 Answer Answer Answer Answer Answer Answer To record payment. Please answer all parts of the question.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Recording Revenue Under Different Repurchase Agreements

On January 1, 2020, Miller Inc. sells equipment to Smith Inc. for $132,000. As stipulated in the revenue contract, Miller Inc. will buy back the equipment on December 31, 2020, for $141,240. The relevant interest rate is 7%

a. Prepare the seller’s journal entry on January 1, 2020.

Date	Account Name	Dr.	Cr.
Jan. 1, 2020	Answer

Answer	Answer
	Answer

Answer

b. Prepare the seller’s journal entry on December 31, 2020.

Date	Account Name	Dr.	Cr.
Dec. 31, 2020	Answer

Answer	Answer
	Answer

Answer	Answer
	To recognize interest.
Dec. 31, 2020	Answer

Answer	Answer
	Answer

Answer	Answer
	To record payment.

c. Assume instead that Miller has the option to buy back the equipment and the fair value of the equipment is expected to
decline through 2020. How would the answers to parts a and b change (if at all)?

Date	Account Name	Dr.	Cr.
Jan. 1, 2020	Answer

Answer	Answer
	Answer

Answer	Answer
Dec. 31, 2020	Answer

Answer	Answer
	Answer

Answer	Answer
	To recognize interest.
Dec. 31, 2020	Answer

Answer	Answer
	Answer

Answer	Answer
	To record payment.

d. Assume instead that Smith has the option to require Miller to buy back the equipment after one year for $141,240 (an amount greater than
the expected market value of the equipment at that time). How would the answers to parts a and b change (if at all)?

Date	Account Name	Dr.	Cr.
Jan. 1, 2020	Answer

Answer	Answer
	Answer

Answer	Answer
Dec. 31, 2020	Answer

Answer	Answer
	Answer

Answer	Answer
	To record interest.
Dec. 31, 2020	Answer

Answer	Answer
	Answer

Answer	Answer
	To record payment.

Please answer all parts of the question.

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