Windsor Leasing Company signs a lease agreement on January 1, 2020, to lease warehouse equipment to Wildhorse Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:1. Wildhorse has the option to purchase the equipment for $20,000 upon termination of the lease. It is not reasonably certain that Wildhorse will exercise this option.2. The equipment has a cost of $163,000 and fair value of $187,800 to Windsor Leasing. The useful economic life is 2 years, with a residual value of $20,000.3. Windsor Leasing desires to earn a return of 6% on its investment.4. Collectibility of the payments by Windsor Leasing is probable.https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdf Prepare the journal entries on the books of Windsor to recognize the establishment of the lease and the receipt of payments in2020 and 2021. Do not include the return of the equipment at lease termination. (Credit aocount titles are automatically indentedwhen amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table providedand round final answers to O decimal places eg. 5,275.)DateAccount Titles and ExplanationDebitCredit1/1/2012/31/2012/31/21 V

Lease agreement is an agreement between two parties in which one party provides its asset for use to…

Answered: Windsor Leasing Company signs a lease…

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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Windsor Leasing Company signs a lease agreement on January 1, 2020, to lease warehouse equipment to Wildhorse Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:

1.		Wildhorse has the option to purchase the equipment for $20,000 upon termination of the lease. It is not reasonably certain that Wildhorse will exercise this option.
2.		The equipment has a cost of $163,000 and fair value of $187,800 to Windsor Leasing. The useful economic life is 2 years, with a residual value of $20,000.
3.		Windsor Leasing desires to earn a return of 6% on its investment.
4.		Collectibility of the payments by Windsor Leasing is probable.

https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdf

Prepare the journal entries on the books of Windsor to recognize the establishment of the lease and the receipt of payments in
2020 and 2021. Do not include the return of the equipment at lease termination. (Credit aocount titles are automatically indented
when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided
and round final answers to O decimal places eg. 5,275.)
Date
Account Titles and Explanation
Debit
Credit
1/1/20
12/31/20
12/31/21 V

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