Three different lease transactions are presented below for Cullumber Enterprises. Assume that all lease transactions start on January1, 2024. Cull umber does not receive title to the properties, either during the lease term or at the end of it. The yearly rental foreach of the leases is paid at the beginning of each year. Cullumber Enterprises prepares its financial statements using ASPE. Assumethat Cullumber Enterprises has purchased the vehicle for $96, 600 instead of leasing it and that the amount borrowed was $96,600at 8% interest, with interest payable at the end of each year. Prepare the entries for 2024. /List a/l debit entries before creditentries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. ff na entry is required,select "No Entry for the account titles and enter O for the amounts_ Record entries in the order displayed in the problem statement)

The objective of the question is to prepare the journal entries for Cullumber Enterprises for the…

Answered: Three different lease transactions are…

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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Brown Enterprises enter into a 4 year lease with ABC Leasing Company. The lease qualifies as an operating lease. The first lease payment of $100,000 was due on January 1, 2024, on the date the lease was executed and all subsequent lease payments due on December 31. The present value of the lease payments was $348,685 and Brown Enterprises correctly recorded the right of use asset and lease liability on January 1, 2024 for this amount. The implicit rate in the lease is 10%. On its 2024 income statement, when Brown Enterprises reports its lease expense for 2024, it will be made up of which of the following components? (Choose all that apply) DAROU amortization $75,132 8. Interest expense $12,829 OCROU amortization $87,171 OD. Interest expense $24,869 Quesdan 12 of 25
On January 1, 2024, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $60,000 each, beginning December 31, 2024, and on each December 31 through 2026. The lessor, HVAC Leasing, calculates lease payments based on an annual interest rate of 8%. Winn also paid a $120,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $180,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2026. Winn's fiscal year is the calendar year. Note: If no entry is required for a transaction/event,…
On January 1, 2021, Coronado Industries leased a building to Sandhill Co. for a ten-year term at an annual rental of $175000. At inception of the lease, Coronado received $701000 covering the first two years' rent of $350000 and a security deposit of $351000. This deposit will not be returned to Sandhill upon expiration of the lease but will be applied to payment of rent for the last two years of the lease. What portion of the $701000 should be shown as a current and long-term liability, respectively, in Coronado's December 31, 2021 balance sheet? Current Liability Long-term Liability $350000 $175000 $175000 $350000 $0 $701000 $350000 $351000
On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: • The lease is noncancelable and has a term of 8 years. • The annual rentals are $39,200, payable at the beginning of each year. • The interest rate implicit in the lease is 11%. • Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for $1 at the end of the lease term, December 31, 2026. • The cost of the equipment to the lessor is $145,500, and the fair value is approximately $223,900. • Ballieu incurs no material initial direct costs. • It is probable that Ballieu will collect the lease payments. • Ballieu estimates that the fair value is expected to be significantly greater than $1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of $39,200 discounted at…
Skysong enters into an agreement with Traveler Inc. to lease a car on December 31, 2019. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal or bargain purchase option. The remaining economic life of the car is 3 years, and it is expected to have no residual value at the end of the lease term. 2. The fair value of the car was $14,100 at commencement of the lease. 3. Annual payments are required to be made on December 31 at the end of each year of the lease, beginning December 31, 2020. The first payment is to be of an amount of $5,148.50, with each payment increasing by a constant rate of 5% from the previous payment (i.e., the second payment will be $5,519.36 and the third and final payment will be $5,795.30). 4. Skysong’ incremental borrowing rate is 8%. The rate implicit in the lease is unknown. 5. Skysong uses straight-line depreciation for all similar cars. (a)Prepare Skysong’ journal…
On December 31, 2019, Windsor Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Windsor to make annual payments of $8.092 at the l an estimated useful life of d and a $4,900 unguar feach year of the lease, starting December 31, 2019. The machine has residual value. The machine reverts back to the lessor at the end of the lease term. Windsor uses the straight-line method of depreciation for all of its plant assets. Windhor's Incremental borrowing rate 15% and the lessor's implicit rate is unknown
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?…
Jay

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