Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Chapter 3, Problem 14P
Using the chart of accounts in Figure 2-1, determine the changes to the balance sheet, income statement,
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Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease payments,
and the recognition of revenue. Assume the lessor's annual accounting period ends on December 31, and it does not use reversing
entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the
order presented in the problem.)
Account Titles and Explanation
Date
1/1/20
/1/20
2/31/20
/1/21
2/31/21
Lease Receivable
Cost of Goods Sold
Sales Revenue
(To record the lease)
Cash
Lease Receivable
(To record the receipt of lease payment)
Lease Receivable
Interest Revenue
Cash
Lease Receivable
Lease Receivable
Interest Revenue
Debit
451,000.00
I
Credit
451,000.00
The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pharoah Company, a lessee.
Commencement date
January 1,
Annual lease payment due at the beginning of
each year, beginning with January 1,
$116,406
Residual value of equipment at end of lease term,
guaranteed by the lessee
$5000
Expected residual value of equipment at end of lease term
$45,000
6 years
6 years
Lease term
Economic life of leased equipment
Fair value of asset at January 1,
$642,000
Lessor's implicit rate
6 %
Lessee's incremental borrowing rate
6 %
The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased
equipment.
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations
to 5 decimal places, eg 1.25124 and the final answers to O decimal places eg. 5,275.)
PHAROAH COMPANY (Lessee)
Lease Amortization Schedule
Annual Lease
Payment Plus…
Crane Company leases a new building from Noble Construction, Inc. The present value of the lease payments is $625,000. The lease is a finance lease. Prepare the journal entry that the lessee should make to record this transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Chapter 3 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 3 - How do the relationships between the balance...Ch. 3 - Which of the transactions from this chapter result...Ch. 3 - Prob. 3DQCh. 3 - Which of the transactions from this chapter result...Ch. 3 - Prob. 5DQCh. 3 - Prob. 6DQCh. 3 - The following invoices are being entered into the...Ch. 3 - Prob. 9PCh. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...
Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...
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