Sheridan Corporation enters into a 6-year lease of equipment on December 31, 2024, which requires 6 annual payments of $41,000 each, beginning December 31, 2024. In addition, Sheridan guarantees the lessor a residual value of $21,300 at the end of the lease. However, Sheridan believes it is probable that the expected residual value at the end of the lease term will be $10,650. The equipment has a useful life of 6 years. Prepare Sheridans' December 31, 2024, journal entries, assuming the implicit rate of the lease is 11% and this is known to Sheridan.
Sheridan Corporation enters into a 6-year lease of equipment on December 31, 2024, which requires 6 annual payments of $41,000 each, beginning December 31, 2024. In addition, Sheridan guarantees the lessor a residual value of $21,300 at the end of the lease. However, Sheridan believes it is probable that the expected residual value at the end of the lease term will be $10,650. The equipment has a useful life of 6 years. Prepare Sheridans' December 31, 2024, journal entries, assuming the implicit rate of the lease is 11% and this is known to Sheridan.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sheridan Corporation enters into a 6-year lease of equipment on December 31, 2024, which requires 6 annual payments of
$41,000 each, beginning December 31, 2024. In addition, Sheridan guarantees the lessor a residual value of $21,300 at the end of the
lease. However, Sheridan believes it is probable that the expected residual value at the end of the lease term will be $10,650. The
equipment has a useful life of 6 years.
Prepare Sheridans' December 31, 2024, journal entries, assuming the implicit rate of the lease is 11% and this is known to Sheridan.
(List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If
no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as
displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.)
Click here to view factor tables.
Date
December 31,
2024
December 31,
2024
Account Titles and Explanation
(To record the lease liability)
(To record lease payment)
Debit
Credit
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