Shamrock Corporation manufactures drones. On December 31, 2019, it leased to Althaus Company a drone that had cost $99,600 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires 5 equal annual rentals of $40,700 payable each December 31, beginning December 31, 2019. An interest rate of 8% is implicit in the lease agreement. Collectibility of the rentals is probable. Prepare Shamrock’s December 31, 2019, journal entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit December 31, 2019 enter an account title To record the lease enter a debit amount enter a credit amount enter an account title To record the lease enter a debit amount enter a credit amount enter an account title To record the lease enter a debit amount enter a credit amount enter an account title To record the lease enter a debit amount enter a credit amount (To record the lease) December 31, 2019 enter an account title To record receipt of lease payment enter a debit amount enter a credit amount enter an account title To record receipt of lease payment enter a debit amount enter a 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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Shamrock Corporation manufactures drones. On December 31, 2019, it leased to Althaus Company a drone that had cost $99,600 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires 5 equal annual rentals of $40,700 payable each December 31, beginning December 31, 2019. An interest rate of 8% is implicit in the lease agreement. Collectibility of the rentals is probable.

Prepare Shamrock’s December 31, 2019, journal entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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.)

Click here to view factor tables.

Date	Account Titles and Explanation	Debit	Credit
December 31, 2019	enter an account title To record the lease	enter a debit amount	enter a credit amount
	enter an account title To record the lease	enter a debit amount	enter a credit amount
	enter an account title To record the lease	enter a debit amount	enter a credit amount
	enter an account title To record the lease	enter a debit amount	enter a credit amount
	(To record the lease)
December 31, 2019	enter an account title To record receipt of lease payment	enter a debit amount	enter a credit amount
	enter an account title To record receipt of lease payment	enter a debit amount	enter a credit amount
	(To record receipt of lease payment)

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