Wilson Foods Corporation leased a commercial food processor on September 3 for Wilson to make quarterly lease payments of $326,290, payable each Septem payment at September 30, 2018. Wilson's incremental borrowing rate is 12%. Wils end of each fiscal year. Wilson recorded the lease as follows: September 30, 2018 Right-of-use asset (calculated below). Lease payable (calculated below) Lease payable Cash (first payment). Calculation of the present lea 4 ayments 5,000,000 326,290 5,000,000 326,290

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Wilson Foods Corporation leased a commercial food processor on September 30, 2018. The five-year finance lease agreement calls
for Wilson to make quarterly lease payments of $326,290, payable each September 30, December 31, March 31, June 30, with the first
payment at September 30, 2018. Wilson's incremental borrowing rate is 12%. Wilson records depreciation on a straight-line basis at the
end of each fiscal year. Wilson recorded the lease as follows:
September 30, 2018
Right-of-use asset (calculated below)
Lease payable (calculated below)
Lease payable
Cash (first payment)
Calculation of the present value of lease payments
$326,290 × 15.32380*= $5,000,000 (rounded)
*Present value of an annuity due of $1: n = 20, /= 3%
Item
Right-of-use asset
Lease payments:
5,000,000
Principal
Interest
326,290
Required:
What would be the pretax amounts related to the lease that Wilson would report in its statement of cash flows for the year ended
December 31, 2018? (Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter your
answers in whole dollars.)
5,000,000
Reported in Statement of Cash Flows as
326,290
Amount
Transcribed Image Text:Wilson Foods Corporation leased a commercial food processor on September 30, 2018. The five-year finance lease agreement calls for Wilson to make quarterly lease payments of $326,290, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2018. Wilson's incremental borrowing rate is 12%. Wilson records depreciation on a straight-line basis at the end of each fiscal year. Wilson recorded the lease as follows: September 30, 2018 Right-of-use asset (calculated below) Lease payable (calculated below) Lease payable Cash (first payment) Calculation of the present value of lease payments $326,290 × 15.32380*= $5,000,000 (rounded) *Present value of an annuity due of $1: n = 20, /= 3% Item Right-of-use asset Lease payments: 5,000,000 Principal Interest 326,290 Required: What would be the pretax amounts related to the lease that Wilson would report in its statement of cash flows for the year ended December 31, 2018? (Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars.) 5,000,000 Reported in Statement of Cash Flows as 326,290 Amount
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