Sheridan Corporation, which uses ASPE, manufactures replicators. On May 29, 2023, it leased to Bonita Limited a replicator that cost $266,000 to manufacture and usually sells for $421,000. The lease agreement covers the replicator's 4-year useful life and requires four equal annual rentals of $111,729 each, beginning May 29, 2023. The equipment reverts to Sheridan at the end of the lease, at which time it is expected that the replicator will have a residual value of $46,000, which is not guaranteed by Bonita, the lessee. An interest rate of 10% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare Sheridan's May 29, 2023 journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation May 29 Lease Receivable May 29 Cost of Goods Sold Sales Revenue Unearned Interest Income Inventory (To record inception of lease.) Cash Lease Receivable (Collection of first lease payment.) Debit 492916 111729 Credit 111729
Sheridan Corporation, which uses ASPE, manufactures replicators. On May 29, 2023, it leased to Bonita Limited a replicator that cost $266,000 to manufacture and usually sells for $421,000. The lease agreement covers the replicator's 4-year useful life and requires four equal annual rentals of $111,729 each, beginning May 29, 2023. The equipment reverts to Sheridan at the end of the lease, at which time it is expected that the replicator will have a residual value of $46,000, which is not guaranteed by Bonita, the lessee. An interest rate of 10% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare Sheridan's May 29, 2023 journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation May 29 Lease Receivable May 29 Cost of Goods Sold Sales Revenue Unearned Interest Income Inventory (To record inception of lease.) Cash Lease Receivable (Collection of first lease payment.) Debit 492916 111729 Credit 111729
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
Transcribed Image Text:Sheridan Corporation, which uses ASPE, manufactures replicators. On May 29, 2023, it leased to Bonita Limited a replicator that cost
$266,000 to manufacture and usually sells for $421,000. The lease agreement covers the replicator's 4-year useful life and requires
four equal annual rentals of $111,729 each, beginning May 29, 2023. The equipment reverts to Sheridan at the end of the lease, at
which time it is expected that the replicator will have a residual value of $46,000, which is not guaranteed by Bonita, the lessee. An
interest rate of 10% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important
uncertainties concerning costs.
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.
Prepare Sheridan's May 29, 2023 journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented
when the 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.
Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.)
Date Account Titles and Explanation
May 29
Lease Receivable
May 29
Cost of Goods Sold
Sales Revenue
Unearned Interest Income
Inventory
(To record inception of lease.)
Cash
Lease Receivable
(Collection of first lease payment.)
Debit
492916
111729
Credit
111729
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education