Rodgers Corporation agrees on January 1, 2025, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual leasepayments of $12,000 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and isnot a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is lessthan 90% of the fair value of the equipment.Prepare Rodgers' journal entries on January 1, 2025 (commencement of the operating lease), and on December 31, 2025. Assume theimplicit rate used by the lessor is 8%, and this is known to Rodgers. (List all debit entries before credit entries. Credit account titles areautomatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles andenter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to "0"decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)Click here to view factor tables.DateAccount Titles and Explanation1/1/251/1/25Right-of-Use AssetLease Liability(To record lease liability)Lease LiabilityCash12/31/25(To record lease payment)Interest ExpenseInterest PayableAccumulated Depreciation-Right-of-Use AssetDebit33399120001712Credit3339912000171211133 Rodgers Corporation agrees on January 1, 2025, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual leasepayments of $12,000 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and isnot a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is lessthan 90% of the fair value of the equipment.Prepare Rodgers' journal entries on January 1, 2025 (commencement of the operating lease), and on December 31, 2025. Assume theimplicit rate used by the lessor is 8%, and this is known to Rodgers. (List all debit entries before credit entries. Credit account titles areautomatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles andenter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to "0"decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.)Click here to view factor tables.DateAccount Titles and Explanation1/1/251/1/25Right-of-Use AssetLease Liability(To record lease liability)Lease LiabilityCash12/31/25(To record lease payment)Interest ExpenseInterest PayableAccumulated Depreciation-Right-of-Use AssetDebit33399120001712Credit3339912000171211133

Lease refers to the agreement that takes place between two parties, the lessor and the lessee. The…

Rodgers Corporation agrees on January 1, 2025, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual lease payments of $12,000 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Assume that for Packers, Inc., the lessor, the collectibility of the lease payments is probable, and the fair value and cost of the equipment is $60,000. Prepare Packers' 2025 journal entries, assuming the company uses straight-line depreciation and no salvage value. (List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation (To record the recognition of the revenue each period) (To record depreciation expense on the leased i equipment) Debit Credit

Rodgers Corporation agrees on January 1, 2025, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual lease payments of $12,000 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Assume that for Packers, Inc., the lessor, the collectibility of the lease payments is probable, and the fair value and cost of the equipment is $60,000. Prepare Packers' 2025 journal entries, assuming the company uses straight-line depreciation and no salvage value. (List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation (To record the recognition of the revenue each period) (To record depreciation expense on the leased i equipment) Debit Credit

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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