Tartufo Corp. entered into a 5-year lease agreement with Gelato Inc. to lease equipment beginning on January 1, 20X5. The IBR is 9% while the rate implicit in the lease is 8%. Tartufo Corp. is aware of the rate implicit in the lease. Annual payments of $61,500 at the beginning of the year are required. The lease stipulates a $50,000 residual value guarantee but Tartufo Corp. expects a $10,000 payout will be required. Tartufo Corp. will return the equipment to Gelato Inc. at the end of the lease term. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: Provide journal entries pertaining to this lease for Tartufo Corp. for the 20X5 year. Tartufo Corp. uses straightline depreciation for similar assets, with a half-year of deprecation recorded in the year of acquisition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations and final answers to the nearest whole dollar amount.)
Tartufo Corp. entered into a 5-year lease agreement with Gelato Inc. to lease equipment beginning on January 1, 20X5. The IBR is 9% while the rate implicit in the lease is 8%. Tartufo Corp. is aware of the rate implicit in the lease. Annual payments of $61,500 at the beginning of the year are required. The lease stipulates a $50,000 residual value guarantee but Tartufo Corp. expects a $10,000 payout will be required. Tartufo Corp. will return the equipment to Gelato Inc. at the end of the lease term. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: Provide journal entries pertaining to this lease for Tartufo Corp. for the 20X5 year. Tartufo Corp. uses straightline depreciation for similar assets, with a half-year of deprecation recorded in the year of acquisition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round intermediate calculations and final answers to the nearest whole dollar amount.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Tartufo Corp. entered into a 5-year lease agreement with Gelato Inc. to lease equipment beginning on January 1, 20X5. The IBR is 9%
while the rate implicit in the lease is 8%. Tartufo Corp. is aware of the rate implicit in the lease.
Annual payments of $61,500 at the beginning of the year are required. The lease stipulates a $50,000 residual value guarantee but
Tartufo Corp. expects a $10,000 payout will be required. Tartufo Corp. will return the equipment to Gelato Inc. at the end of the lease
term. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.)
Required:
Provide journal entries pertaining to this lease for Tartufo Corp. for the 20X5 year. Tartufo Corp. uses straightline depreciation for
similar assets, with a half-year of deprecation recorded in the year of acquisition. (If no entry is required for a transaction/event,
select "No journal entry required" in the first account field. Round intermediate calculations and final answers to the nearest
whole dollar amount.)
View transaction list
View journal entry worksheet
No
Date
General Journal
Debit
Credit
1
Jan 01, 20X5
No Transaction Recorded
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