Walmart leases equipment to Staples on Jan 1, 2020. The lease is appropriately recorded as a purchase for accounting purposes for Staples and as a sale for accounting purposes for Walmart. The lease is a ten-year period. Equal annual payments under the leaser are $25,000 and are due on Jan 1 of each year. The first payment is made on Jan 1, 2020. The cost of the equipment on Walmart's accounting records is $100,000. The equipment has an estimated useful life of ten years with no residual value expected. The rate of interest contemplated by Walmart and Staples is 10%. Assume the present value of the lease payments equals the market value of the equipment. Assume this is sales type lease. a. Prepare the entry required for Walmart on Jan, 1, 2020 b. Prepare the entry required for Walmart on Dec 31, 2020 c. Prepare the entry required for Walmart on Jan, 1, 2021 d. Prepare the entry required for Walmart on Dec 31 2021
Walmart leases equipment to Staples on Jan 1, 2020. The lease is appropriately recorded as a purchase for accounting purposes for Staples and as a sale for accounting purposes for Walmart. The lease is a ten-year period. Equal annual payments under the leaser are $25,000 and are due on Jan 1 of each year. The first payment is made on Jan 1, 2020. The cost of the equipment on Walmart's accounting records is $100,000. The equipment has an estimated useful life of ten years with no residual value expected. The rate of interest contemplated by Walmart and Staples is 10%. Assume the present value of the lease payments equals the market value of the equipment. Assume this is sales type lease.
a. Prepare the entry required for Walmart on Jan, 1, 2020
b. Prepare the entry required for Walmart on Dec 31, 2020
c. Prepare the entry required for Walmart on Jan, 1, 2021
d. Prepare the entry required for Walmart on Dec 31 2021
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