### Lease Transactions for Pharoah EnterprisesPharoah Enterprises is examining three different lease transactions, all commencing on January 1, 2024. The company does not acquire ownership of the properties during or at the end of the lease terms. The annual rental payments for each lease are made at the start of each year. Financial statements are prepared in line with ASPE (Accounting Standards for Private Enterprises).#### Lease Transaction Details:| | **Manufacturing Equipment** | **Vehicles** | **Office Equipment** ||--------------------------|-----------------------------|--------------|----------------------|| **Lease Term** | 5 years | 6 years | 3 years || **Estimated Economic Life** | 15 years | 7 years | 6 years || **Yearly Rental Payment**| $16,800 | $18,000 | $4,680 || **Fair Market Value of Leased Asset** | $117,600 | $102,000 | $21,000 || **Present Value of Lease Rental Payments** | $75,852 | $94,356 | $12,060 || **Interest Rate** | 3.5% | 4% | 8% |**Assumption for Vehicle Purchase:**Pharoah Enterprises has opted to purchase the vehicle for $102,000 rather than leasing it. This transaction is financed by borrowing $102,000 at an 8% interest rate, with interest payable at the end of each year. The task is to prepare the financial entries for 2024.- **Entry Guidelines:** - List all debit entries before credit entries. - Credit account titles will be automatically indented when the 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. - Record entries in the order specified in the problem statement. The image displays a journal entry template used in accounting. Here’s a detailed explanation:### Journal Entry Template:- **Columns:** - **Date:** This column provides a space to input the date on which the transaction occurs. - **Account Titles:** This space is used to specify the names of the accounts involved in the transaction. - **Debit:** This section captures the monetary amount being debited from the respective account. - **Credit:** This section captures the monetary amount being credited to the respective account.- **Rows:** - **First and Second Rows:** These rows provide fields for the entry of two line items in the journal. Each row includes spaces to specify the date, account, and amounts for debits and credits. - **Third Row (Instruction):** Contains the note "(To record interest payment.)" indicating the purpose of the journal entry on this line. - **Fourth and Fifth Rows:** Additional fields for entering more line items, similar to the first and second rows. - **Sixth Row (Instruction):** Contains the note "(To record depreciation expense.)" indicating a different purpose for this journal entry.### Usage:Accounting professionals use this template to systematically record financial transactions, ensuring that every transaction affecting the financial statements is appropriately documented. Debits and credits are used to maintain the accounting equation's balance, reflecting changes in assets, liabilities, and equity.

Leasing allows businesses or individuals to access and utilize high-quality assets that might be…

Three different lease transactions are presented below for Pharoah Enterprises. Assume that all lease transactions start on January 1, 2024. Pharoah does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the beginning of each year. Pharoah Enterprises prepares its financial statements using ASPE. Lease term Estimated economic life Yearly rental payment Fair market value of leased asset Present value of lease rental payments Interest rate Manufacturing Equipment 5 years 15 years $16,800 $117,600 $75,852 3.5% Office Equipment 6 years 3 years 7 years 6 years $18,000 $4,680 $102,000 $21,000 $94,356 $12,060 Vehicles 4% 8% Assume that Pharoah Enterprises has purchased the vehicle for $102,000 instead of leasing it and that the amount borrowed was $102,000 at 8% interest, with interest payable at the end of each year. Prepare the entries for 2024. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no 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.)

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q