Regading the information in the screenshot, pease answer requirements 1-5. Thanks! Requirement #1 Calculate the present value of the lease payments and record the journal entry at lease inception for the lessee. Requirement #2 In the space below, prepare the lease amortization schedule. Requirement #3 Prepare the journal entries the lessee would record on January 1st 2022 and December 31st, 2022 for the first two $30,000 lease payments. Requirement #4 Determine the effect on Café Med's earnings (net income) for the first year (2022)? Requirement #5 Determine the balances relating to the lease (the lease payable & right-of-use asset) on Café Med's balance sheet as of December 31, 2022? SetupAt January 1, 2022, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The leaseagreement specifies annual payments of $30,000 beginning January 1, 2022, the beginning of the lease, and at each December 31 thereafterthrough 2030. The equipment was acquired recently by Crescent at a cost of $225,000 (its fair value) and was expected to have a useful life12 years with no salvage value at the end of its life. Crescent seeks a 12% return on its lease investments. By this arrangement, the lease isdeemed to be an operating lease.Summarized FactsA) 9 year least starting 1/1/22B) Annual payments of $30,000 starting 1/1, and on 12/31 after thatC) 12% interest rateD) Lease is an operating leaseExtraneous Facts Not NeededY) Estimated useful life = 12 years...lessee doesn't care, it's an operating leaseZ) Acquired for $225,000 doesn't matter as the lease is classified as an operating lease

A lease is defined as a contractual agreement incorporated between two business entities where one…

Answered: Setup At January 1, 2022, Café Med…

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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Regading the information in the screenshot, pease answer requirements 1-5. Thanks! Requirement #1 Calculate the present value of the lease payments and record the journal entry at lease inception for the lessee. Requirement #2 In the space below, prepare the lease amortization schedule. Requirement #3 Prepare the journal entries the lessee would record on January 1st 2022 and December 31st, 2022 for the first two $30,000 lease payments. Requirement #4 Determine the effect on Café Med's earnings (net income) for the first year (2022)? Requirement #5 Determine the balances relating to the lease (the lease payable & right-of-use asset) on Café Med's balance sheet as of December 31, 2022?

Setup
At January 1, 2022, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease
agreement specifies annual payments of $30,000 beginning January 1, 2022, the beginning of the lease, and at each December 31 thereafter
through 2030. The equipment was acquired recently by Crescent at a cost of $225,000 (its fair value) and was expected to have a useful life
12 years with no salvage value at the end of its life. Crescent seeks a 12% return on its lease investments. By this arrangement, the lease is
deemed to be an operating lease.
Summarized Facts
A) 9 year least starting 1/1/22
B) Annual payments of $30,000 starting 1/1, and on 12/31 after that
C) 12% interest rate
D) Lease is an operating lease
Extraneous Facts Not Needed
Y) Estimated useful life = 12 years...lessee doesn't care, it's an operating lease
Z) Acquired for $225,000 doesn't matter as the lease is classified as an operating lease

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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