The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Crane Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $104,218 Residual value of equipment at end of lease term, guaranteed by the lessee $51,000 Expected residual value of equipment at end of lease term $46,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $540,000 Lessor’s implicit rate 9 % Lessee’s incremental borrowing rate 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Click here to view factor tables. Prepare all of the journal entries for the lessee for and to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31. (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 0 for the amounts. Round answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit choose a transaction date 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.) choose a transaction date enter an account title to record first lease payment enter a debit amount enter a credit amount enter an account title to record first lease payment enter a debit amount enter a credit amount (To record first lease payment.) choose a transaction date enter an account title to record interest enter a debit amount enter a credit amount enter an account title to record interest enter a debit amount enter a credit amount (To record interest.) choose a transaction date enter an account title to record amortization enter a debit amount enter a credit amount enter an account title to record amortization enter a debit amount enter a credit amount (To record amortization.) choose a transaction date enter an account title to record second lease payment enter a debit amount enter a credit amount enter an account title to record second lease payment enter a debit amount enter a credit amount (To record second lease payment.) choose a transaction date enter an account title to record interest enter a debit amount enter a credit amount enter an account title to record interest enter a debit amount enter a credit amount (To record interest.) choose a transaction date enter an account title to record amortization enter a debit amount enter a credit amount enter an account title to record amortization enter a debit amount enter a credit amount (To record amortization.)

The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Crane Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $104,218 Residual value of equipment at end of lease term, guaranteed by the lessee $51,000 Expected residual value of equipment at end of lease term $46,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $540,000 Lessor’s implicit rate 9 % Lessee’s incremental borrowing rate 9 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Click here to view factor tables. Prepare all of the journal entries for the lessee for and to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31. (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 0 for the amounts. Round answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit choose a transaction date 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.) choose a transaction date enter an account title to record first lease payment enter a debit amount enter a credit amount enter an account title to record first lease payment enter a debit amount enter a credit amount (To record first lease payment.) choose a transaction date enter an account title to record interest enter a debit amount enter a credit amount enter an account title to record interest enter a debit amount enter a credit amount (To record interest.) choose a transaction date enter an account title to record amortization enter a debit amount enter a credit amount enter an account title to record amortization enter a debit amount enter a credit amount (To record amortization.) choose a transaction date enter an account title to record second lease payment enter a debit amount enter a credit amount enter an account title to record second lease payment enter a debit amount enter a credit amount (To record second lease payment.) choose a transaction date enter an account title to record interest enter a debit amount enter a credit amount enter an account title to record interest enter a debit amount enter a credit amount (To record interest.) choose a transaction date enter an account title to record amortization enter a debit amount enter a credit amount enter an account title to record amortization enter a debit amount enter a credit amount (To record amortization.)

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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The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Crane Company, a lessee.

Commencement date	January 1,
Annual lease payment due at the beginning of each year, beginning with January 1,	$104,218
Residual value of equipment at end of lease term, guaranteed by the lessee	$51,000
Expected residual value of equipment at end of lease term	$46,000
Lease term	6	years
Economic life of leased equipment	6	years
Fair value of asset at January 1,	$540,000
Lessor’s implicit rate	9	%
Lessee’s incremental borrowing rate	9	%

The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment.

Click here to view factor tables.

Prepare all of the journal entries for the lessee for and to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31. (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 0 for the amounts. Round answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
choose a transaction date	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.)
choose a transaction date	enter an account title to record first lease payment	enter a debit amount	enter a credit amount
	enter an account title to record first lease payment	enter a debit amount	enter a credit amount
	(To record first lease payment.)
choose a transaction date	enter an account title to record interest	enter a debit amount	enter a credit amount
	enter an account title to record interest	enter a debit amount	enter a credit amount
	(To record interest.)
choose a transaction date	enter an account title to record amortization	enter a debit amount	enter a credit amount
	enter an account title to record amortization	enter a debit amount	enter a credit amount
	(To record amortization.)
choose a transaction date	enter an account title to record second lease payment	enter a debit amount	enter a credit amount
	enter an account title to record second lease payment	enter a debit amount	enter a credit amount
	(To record second lease payment.)
choose a transaction date	enter an account title to record interest	enter a debit amount	enter a credit amount
	enter an account title to record interest	enter a debit amount	enter a credit amount
	(To record interest.)
choose a transaction date	enter an account title to record amortization	enter a debit amount	enter a credit amount
	enter an account title to record amortization	enter a debit amount	enter a credit amount
	(To record amortization.)

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