On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangementspecified three annual lease payments of $96,000 each, beginning December 31, 2024, and on each December 31 through 2026. Thelessor, HVAC Leasing, calculates lease payments based on an annual interest rate of 5%. Winn also paid a $321,000 advance paymentat the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying thespace at a cost of $417,000. The useful life of the building and the structural modifications were estimated to be 30 years with noresidual value.Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)Required:Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2026. Winn's fiscal year isthe calendar year.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round yourvers to the nearest whole dollar.View transaction listJournal entry worksheet1234 5 6 7Record the beginning of the lease for Winn.812

An operating lease is a rental agreement where the lessee uses an asset for a specific period,…

Answered: Required: Prepare the appropriate…

Required: Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2026. Winn's fiscal year is the calendar year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement
specified three annual lease payments of $96,000 each, beginning December 31, 2024, and on each December 31 through 2026. The
lessor, HVAC Leasing, calculates lease payments based on an annual interest rate of 5%. Winn also paid a $321,000 advance payment
at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the
space at a cost of $417,000. The useful life of the building and the structural modifications were estimated to be 30 years with no
residual value.
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Required:
Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2026. Winn's fiscal year is
the calendar year.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your
vers to the nearest whole dollar.
View transaction list
Journal entry worksheet
1
2
3
4 5 6 7
Record the beginning of the lease for Winn.
8
12

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