Required: 1.How should this lease be classified by Mid-South Urologists Group and by Physicians’ Leasing? 2.Prepare appropriate entries for both Mid-South Urologists Group and Physicians’ Leasing from the beginning of the lease through the second rental payment on Aril 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31). 3.Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced the machine at a cost of $1.5 million. Prepare appropriate entries for Rand Medical from the beginning of the lease through the second lease payment on April 1, 2021.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians Leasing purchased a lithotripter from Rand for $1,720,000 and leased it to Mid-South Urologists Group, Inc., January 1, 2021. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1, and PVAD of $1)

Lease Description:

Quarterly lease payments                                                                                         $103,127-beginning of each period.

Lease term                                                                                                                    5 years (20 quarters)

No residual value; no purchase option

Economic life of lithotripter                                                                                      5 years 

Implicit interest rate and lessee’s incremental borrowing rate                          8%

Fair value of asset                                                                                                       $1720,000

 

Required:

1.How should this lease be classified by Mid-South Urologists Group and by Physicians’ Leasing?

2.Prepare appropriate entries for both Mid-South Urologists Group and Physicians’ Leasing from the beginning of the lease through the second rental payment on Aril 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31).

3.Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced the machine at a cost of $1.5 million. Prepare appropriate entries for Rand Medical from the beginning of the lease through the second lease payment on April 1, 2021.

 

Complete this question by entering your answers in the tabs below.

 

Required 1

 

How should this lease be classified by Mid-south Urologists Group and by Physicians’ Leasing?

 

Mid-South Urologist Group     ____________________________

Physicians’ Leasing                   ____________________________

 

 

Required 2 Lease

Prepare appropriate entries for Mid-South Urologists Group from the beginning of the lease through the second rental payment on April 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31.) (If no entry is required for a transaction/event, select “No journal entry required” in the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.)

 

  1. January 01, 2021, Record lease.
  2. January 01, 2021, Record cash payment.
  3. April 01, 2021, Record cash payment.

 

Required 2 Lessor

Prepare appropriate entries for Physicians’ Leasing from the beginning of the lese through the second rental payment on April 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31). (If no entry is required for a transaction/event, select “No journal entry required” in the first account field. Enter your answers in whole dollars and not in the millions of dollars. Round your answers to nearest whole dollars.)

 

  1. January 01, 2021, Record lease.
  2. January 01, 2021, Record cash received.
  3. April 01, 2021, Record cash received.

 

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Lease accounting
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.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education