Sandhill has the option to purchase the equipment for $25,000 upon termination of the lease. It is not reasonably certain that Sandhill will exerdse this option. The equipment has a cost of $300,000 and falr value of $349,000 to Teal Mountaln Leasing. The useful economic life is 2 years, with a residual value of $25,000. Teal Mountain Leasing destres to earm a returm of 5% on its investment. Collectibility of the payments by Teal Mountain Leasing is probable. 1. 2. 3. 4.

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
Teal Mountaln Leasing Company slgns a lease agreement on January 1, 2020, to lease electronic equipment to Sandhill Company. The term of the non-cancelable lease Is 2 years, and payments are required at the end of each year. The following Information
relates to thts agreement:
1.
Sandhill has the option to purchase the equlpment for S25,000 upon terminatlon of the lease. it is not reasonably certaln that Sandhill will exercse this optlon.
2.
The equlpment has a cost of $300,000 and falr value of $349,000 to Teal Mountaln Leasing. The useful economic life is 2 years, with a residual value of $25,000,
3.
Teal Mountaln Leasing desIres to eam a retum of 5%% en Its Investment.
4.
Collectibility of the payments by Teal Mountaln Leasing Is probable.
Click here bO View factor tables.,
Prepare the journal entries on the books of Teal Mountain Leasing to reflect the payments recelved under the lease and to recognize Income for the years 2020 and 2021. (credit account titles are automadcally indented when amount is entere. Do not
inderrt manually. For calculation purposes, use 5 decinmal places as displayed in the factor table provided and roond final answers to O decfmal places e.g.5,275.)
Date
Account Tides and Explanation
Debit
Credit
Transcribed Image Text:Teal Mountaln Leasing Company slgns a lease agreement on January 1, 2020, to lease electronic equipment to Sandhill Company. The term of the non-cancelable lease Is 2 years, and payments are required at the end of each year. The following Information relates to thts agreement: 1. Sandhill has the option to purchase the equlpment for S25,000 upon terminatlon of the lease. it is not reasonably certaln that Sandhill will exercse this optlon. 2. The equlpment has a cost of $300,000 and falr value of $349,000 to Teal Mountaln Leasing. The useful economic life is 2 years, with a residual value of $25,000, 3. Teal Mountaln Leasing desIres to eam a retum of 5%% en Its Investment. 4. Collectibility of the payments by Teal Mountaln Leasing Is probable. Click here bO View factor tables., Prepare the journal entries on the books of Teal Mountain Leasing to reflect the payments recelved under the lease and to recognize Income for the years 2020 and 2021. (credit account titles are automadcally indented when amount is entere. Do not inderrt manually. For calculation purposes, use 5 decinmal places as displayed in the factor table provided and roond final answers to O decfmal places e.g.5,275.) Date Account Tides and Explanation Debit Credit
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

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