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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:

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:

FINANCIAL ACCOUNTING
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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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, 2021? (Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars.) Item Right-of-use asset Lease payments: Principal Interest X Answer is complete but not entirely correct. Reported in Statement of Cash Flows as Disclosure notes for Statement of Cash Flows Outflow from financing activities Outflow from operating activities ✓$ ✓$ ✓$ Amount 2,400,000 245,937 X 67,301 X
Transcribed Image Text: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, 2021? (Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars.) Item Right-of-use asset Lease payments: Principal Interest X Answer is complete but not entirely correct. Reported in Statement of Cash Flows as Disclosure notes for Statement of Cash Flows Outflow from financing activities Outflow from operating activities ✓$ ✓$ ✓$ Amount 2,400,000 245,937 X 67,301 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 Calculation 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 ended December 31, 2021? (Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars.)
Transcribed Image Text: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 Calculation 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 ended December 31, 2021? (Cash outflows should be indicated by a minus sign. Do not round your intermediate calculations. Enter your answers in whole dollars.)
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