Wilson Foods Corporation leased a commercial food processor on September 30, 2021. The five-year finance lease agreement callsfor Wilson to make quarterly lease payments of $156,619, payable each September 30, December 31, March 31, June 30, with the firstpayment at September 30, 2021. Wilson's incremental borrowing rate is 12%. Wilson records amortization on a straight-line basis at theend of each fiscal year. Wilson recorded the lease as follows:September 30, 2021Right-of-use asset (calculated below)Lease payable (calculated below)Lease payableCash (first payment)2,400,000156,6192,400,000156,619Calculation of the present value of lease payments$156,619 x 15.3238* = $2,400,000 (rounded)*Present value of an annuity due of $1: n = 20, i = 3%Required:What would be the pretax amounts related to the lease that Wilson would report in its statement of cash flows for the year endedDecember 31, 2021? (Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter youranswers in whole dollars.) Required:What would be the pretax amounts related to the lease that Wilson would report in its statement of cash flows for the year endedDecember 31, 2021? (Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter youranswers in whole dollars.)ItemRight-of-useassetLease payments:PrincipalInterest> Answer is complete but not entirely correct.Reported in Statement of Cash Flows asDisclosure notes for Statement of Cash FlowsOutflow from financing activitiesOutflow from operating activities››$GAGAIS$Amount2,400,000245,937 X67,301 x

Wilson Foods Corporation leased a commercial food processor on September 30, 2021. The five-year finance lease agreement calls for Wilson to make quarterly lease payments of $156,619, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2021. Wilson's incremental borrowing rate is 12%. Wilson records amortization on a straight-line basis at the end of each fiscal year. Wilson recorded the lease as follows: September 30, 2021 Right-of-use asset (calculated below) Lease payable (calculated below) Lease payable Cash (first payment) 2,400,000 156,619 2,400,000 156,619

Wilson Foods Corporation leased a commercial food processor on September 30, 2021. The five-year finance lease agreement calls for Wilson to make quarterly lease payments of $156,619, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2021. Wilson's incremental borrowing rate is 12%. Wilson records amortization on a straight-line basis at the end of each fiscal year. Wilson recorded the lease as follows: September 30, 2021 Right-of-use asset (calculated below) Lease payable (calculated below) Lease payable Cash (first payment) 2,400,000 156,619 2,400,000 156,619

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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On January 1, 2021, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $80,000 each, beginning December 31, 2021, and at each December 31 through 2023. The lessor, HVAC Leasing calculates lease payments based on an annual interest rate of 5%. Winn also paid a $100,000 advance payment at the beginning of the lease in addition to the first $80,000 lease payment. 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.Required:Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2023. Winn’s fiscal year is the calendar year.
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