The following is a lease amortization schedule for Green Jeans Company (the lessee). The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to Green Jeans and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable.| Payment | Cash Payment | Effective Interest | Decrease in Balance | Outstanding Balance ||---------|--------------|--------------------|---------------------|---------------------|| 1 | 13,000 | 7,487 | 5,513 | 87,867 || 2 | 13,000 | 6,935 | 6,065 | 74,867 || 3 | 13,000 | 6,329 | 6,671 | 69,354 || 4 | 13,000 | 5,662 | 7,338 | 63,289 || 5 | 13,000 | 4,928 | 8,072 | 56,618 || 6 | 13,000 | 4,121 | 8,879 | 49,280 || 7 | 13,000 | 3,233 | 9,767 | 41,208 || 8 | 13,000 | ? | ? | 32,329 || 9 | 13,000 | ? | ? | 22,562 || 10 | 13,000 | ? | ? | ? |**Question:** What is Green Jean's outstanding balance after payment 9? (Round your answer to the nearest whole dollar.)This schedule outlines the cash payments, effective interest, decrease in balance, and outstanding balance for each payment period. The missing values in the later payments indicate points for further calculation. The entries are set up to help understand how each payment affects loan balance reduction and interest applied.

Outstanding balance is the amount of lease still to be paid. The interest is charged on the…

The following is a lease amortization schedule for Green Jeans Company (the lessee). The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to Green Jeans and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment 1 2 3 4 5 6 7 8 9 10 Cash Payment 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 Effective Interest 7,487 6,935 6,329 5,662 4,928 4,121 3,233 ? ? Decrease in balance 13,000 5,513 6,065 6,671 7,338 8,072 8,879 9,767 ? ? Outstanding Balance 87,867 74,867 69,354 63,289 56,618 49,280 41,208 32,329 22,562 ? ? What is Green Jean's outstanding balance after payment 9? (Round your answer to the nearest whole dollar.)

The following is a lease amortization schedule for Green Jeans Company (the lessee). The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to Green Jeans and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment 1 2 3 4 5 6 7 8 9 10 Cash Payment 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 Effective Interest 7,487 6,935 6,329 5,662 4,928 4,121 3,233 ? ? Decrease in balance 13,000 5,513 6,065 6,671 7,338 8,072 8,879 9,767 ? ? Outstanding Balance 87,867 74,867 69,354 63,289 56,618 49,280 41,208 32,329 22,562 ? ? What is Green Jean's outstanding balance after payment 9? (Round your answer to the nearest whole dollar.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2020, Mountain Inc. leases a machine used in its operations. The annual lease payment is $10,000 due on December 31 of 2020, 2021, and 2022. The fair value of the machine on January 1, 2020 is $26,730. The machine has no residual value. Mountain could borrow on a three-year collateralized loan at 6%. If the lease is accounted for as a finance lease, the total expenses related to this lease contract that Mountain Inc. will report in its income statement for the year ending December 31, 2020 is Select one: a. $10,600 b. $10,514 c. $10,717 d. $10,000
Grygiel Company leases a nonspecialized machine with a fair 20 value of $50,000 to Baker Company. The lease has a life of 6 years and requires a $10,000 payment at the end of each year. The lease does not include a transfer of ownership nor a bargain purchase option, and life of the lease is less than a major part of the expected economic life of the machine. It is probable at Grygiel will collect lease payments plus any amount necessary to satisfy a residual value guarantee. Round your answers to the nearest dollar. 1. Next Level If the interest rate implicit lease is 10%, compute the machine's expected residual value. 2. Next Level If the residual alue is guaranteed by Baker, how would each company classify the lease? 3. Next Level If the residual value is not guaranteed by Baker but is instead guaranteed by a third party,how would each company classify the lease?
Terms of a lease agreement and related facts were: a. Incremental costs of commissions for brokering the lease and consummating the completed lease transaction incurred by the lessor were $5,408. b. The retail cash selling price of the leased asset was $425,000. Its useful life was three years with no residual value. c. The lease term is three years and the lessor paid $425,000 to acquire the asset. d. Annual lease payments at the beginning of each year were $160,000. e. Lessor's implicit rate when calculating annual rental payments was 13%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the appropriate entries for the lessor to record the lease and related payments at its beginning, January 1, 2018. 2. Calculate the effective rate of interest revenue after adjusting the net investment by initial direct costs. 3. Record any entry(s) necessary at December 31, 2018, the fiscal year-end.…
(Lessor Computations and Entries, Sales-Type Lease with Unguaranteed Residual Value) George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $278,072, and its unguaranteed residual value at the end of the lease term is estimated to be $20,000. National will pay annual payments of $40,000 at the beginning of each year and all maintenance, insurance, and taxes. George incurred costs of $180,000 in manufacturing the equipment and $4,000 in negotiating and closing the lease. George has determined that the collectibility of the lease payments is reasonably predictable,that no additional costs will be incurred, and that the implicit interest rate is 10%.Instructions(a) Discuss the nature of this lease in relation to the lessor and compute the amount of each of the following items.(1) Lease receivable.(2) Sales price.(3) Cost of sales.(b) Prepare a 10-year…
As a supplier of heavy-duty machineries, Pine Ltd leased a machine to Bulla Ltd on an 8-year non-cancellable lease. The following information is available: Lease term 8 years i) Residual value at the end of the term $10 000 Ii) Bargain purchase option at the end of the term $20 000 iii) Minimum lease payments (at the end of each year) $120 000 iv) Service costs included in minimum lease payments $20 000 Rate implicit in the contract 12% Cumulative present value factor at 12% for 8 years 4.9676 Present value factor at 12% for 8th year 0.4039 Required: Which of the items from i) – iv) above will not be included in determining the leased asset and leased liability at the inception of the lease, and explain why not? ANSWER a): What is the amount to be recorded as an asset and a liability in the books of the lessee that is in accordance with AASB 16 Leases?
S Terms of a lease agreement and related facts were as follows: a. The lease asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b. Annual lease payments at the beginning of each year were $20,873, beginning January 1. c. Lessor's implicit rate when calculating annual rental payments was 10%. d. Costs of $2,062 for legal fees for the lease execution were the responsibility of the lessor. Required: Prepare the appropriate entries for the lessor to record the lease, the initial payment at its beginning, and at the December 31 fiscal year-end under each of the following three independent assumptions: 1. The lease term is three years and the lessor paid $100,000 to acquire the asset (operating lease). 2. The lease term is six years and the lessor paid $100,000 to acquire the asset. Also assume that adjusting the lease receivable (net investment) by initial direct costs reduces the effective rate of interest…
Use the 5 lease criteria to determine if the following lease qualifies as a Capital, Financing lease. The Sirap Co leased equipment from the lessee valued at $400,000. The lease contract has payments of $50,000 per year payable at the end of each year for 12 years. The interest rate is at 8%. The lessor will repossess the equipment at the end of the lease term. The leased equipment does not have a bargain purchase option. The leased equipment has an economic useful life of 16 years. Required: use the 5 criteria, like in illustration 15 - 4 to determine if the lease qualifies as a Capital, financing lease.
me.1
On January 1, 2021, National Insulation Corporation (NIC) leased equipment from United Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by NIC. Portions of the United Leasing's lease amortization schedule appear below: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Jan. 1 2021 2021 2022 2023 2024 2025 2026 1. 2. WN 3. 4. 2038 2039 2040 2041 7 Payments 14,500 14,500 14,500 14,500 14,500 14,500 14,500 14,500 14,500 38,449 5. 6. Net investment Effective Decrease in Interest Balance 11,800 11,584 11,351 11,099 10,827 5,250 4,510 3,711 2,848 Lease term Asset's residual value Effective annual interest rate Lease payments for United Lease payments for NIC 7. 8. Right-of-use asset Required: 1. What is the lease term In years? 2. What is the asset's residual value expected at the end of the lease term?…
Refer to the following lease amortization schedule. The 10 payments are made annually starting with the beginning of the lease. Title does not transfer to the lessee and there is no purchase option or guaranteed residual value. The asset has an expected economic life of 12 years. The lease is noncancelable. Payment Cash Payment Effective Interest Decrease in balance Outstanding Balance 63,282 1 10,000 10,000 53,282 2 10,000 6,394 3,606 49,676 3 10,000 5,961 4,039 45,637 4 10,000 5,476 4,524 41,113 5 10,000 4,934 5,066 36,047 6 10,000 4,326 5,674 30,373 7 10,000 3,645 6,355 24,018 8 10,000 2,882 7,118 16,900 9 10,000 ? ? ? 10 10,000 ?…