Smith, the lessee, signs an 8-year lease agreement of a floor of a building on December 31, 2020, that requires annual payments of $70,000, beginning immediately. The residual value is guaranteed to the lessor of $50,000 at the end of the lease term. Smith estimates that the residual will have a value of $30,000 at the end of the lease term. Smith is aware of the lessor's implicit rate of interest of 7%. Record Smith's journal entries on December 31, 2020, assuming that the lease is properly classified as a finance lease. • Note: Round your answers to the nearest whole dollar. Date Account Name Dec. 31, 2020 Dec. 31, 2020 To record asset and liability Dr. Cr. Answer Answer Answer Answer Answer Answer

Smith, the lessee, signs an 8-year lease agreement of a floor of a building on December 31, 2020, that requires annual payments of $70,000, beginning immediately. The residual value is guaranteed to the lessor of $50,000 at the end of the lease term. Smith estimates that the residual will have a value of $30,000 at the end of the lease term. Smith is aware of the lessor's implicit rate of interest of 7%. Record Smith's journal entries on December 31, 2020, assuming that the lease is properly classified as a finance lease. • Note: Round your answers to the nearest whole dollar. Date Account Name Dec. 31, 2020 Dec. 31, 2020 To record asset and liability Dr. Cr. Answer Answer Answer Answer Answer Answer

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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