Explain about the initial direct costs.

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Answer 1

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Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: 1. Assume that 5% of the L.L. Bean boots are returned by customers for various reasons. L. Bean has a 100% refund policy for returns, no matter what the reason. What would the journal entry be to accrue L.L. Bean's sales returns for this one pair of boots? (Note: L.L. Bean most likely will make…

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Answer 2

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Answer 3

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Answer 4

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Answer 5

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

Answer 6

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

Answer 7

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

Answer 8

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

Answer 9

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

Answer 10

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

Answer 11

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 20 - Prob. 1GI Ch. 20 - What is the difference between the lessee and...Ch. 20 - Prob. 3GI Ch. 20 - Prob. 4GI Ch. 20 - Prob. 5GI Ch. 20 - Prob. 6GI Ch. 20 - What are the two types of lease classifications...Ch. 20 - Prob. 8GI Ch. 20 - Prob. 9GI Ch. 20 - Prob. 10GI

Explain about the initial direct costs.

Solution Summary: The author explains the accounting treatment of initial direct costs for different types of leases.

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Explain about the initial direct costs.

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Chapter 20 Solutions