User Account

All Pages

Prepare the journal entry to record the lease agreement

Assignment Help Accounting Basics
Reference no: EM131915617

Questions -

Q1. Shapiro Company has entered into a lease agreement for equipment which is not cancelable. The details of the lease are as follows: Inception of the lease: Jan 1, 2012, residual value at the end of the lease term is guaranteed at the end of the lease term for $50,000, annual lease payments are $124,798 due at the beginning of each year, starting on Jan 1, 2012. The lease term is 6 years, the economic life of the equipment is 5 years and the fair value of the asset at Jan 1, 2012 is $600,000. The borrowing rate is 6% per year. The lessee uses the straight line method to depreciate the asset.

a. Prepare the journal entry to record the lease agreement on Jan 1, 2012 from the lessee's perspective.

b. Record the first payment on Jan 1, 2012

c. Record the second payment on Jan 1, 2013 and any adjusting entries needed on Dec 31, 2013.

Q2. Hamilton Manufacturing manufactures equipment for booths and has leased one to Jensen for a period of 10 years. The equipment has an estimated useful life of 12 years and the normal selling price of the asset is $278,072. The unguaranteed residual value is $20,000. Jensen will make annual payments of $40,000 at the beginning of each year starting on June 1, 2012 and all maintenance and insurance costs. It cost George $180,000 to manufacture the equipment and the borrowing rate is 10%.

a. Record the lease agreement from the lessor's perspective on July 1, 2013.

b. Record receipt of the first payment on July 1, 2013

c. Record any adjusting entry at December 31, 2013

d. Record receipt of the second payment on July 1, 2014 and any other entries if needed.

Q3. On January 1, 2011 Cage Corp. leased a new machine from Faldo Corp for 3 years which has an expected useful life of 8 years with no salvage value. It is depreciated on a straight line basis. The annual rental payments are $180,000 and start at the beginning of the year. Cage is required to pay a security deposit of $35,000 at the signing of the lease.

a. Record the lease agreement from the lessee's point of view on Jan 1, 2011.

b. Record payment of the security deposit by Cage and the first payment

c. Record the journal entry for initial lease contract from the lessor's perspective.

d. Record the first payment received by the lessor and the security deposit.

e. Record any adjusting journal entry needed at December 31, 2011 by the lessee or lessor.

Reference no: EM131915617

Questions Cloud

Review of nutritional supplementation for older people : Systematic Reviewing (PU5526) - Using the Cochrane risk of bias tool, assess the quality of conduct of these two studies, as reported, and construct a table
Does management have a flawed strategy : Is management reluctant to change, doesn't embrace new and use new technology?
How has technology revolution positively impacted society : How has the technology revolution positively impacted society? How has the technology revolution negatively impacted society?
Explain the plan to prevent the threat from happening : Explain the plan to prevent the threat from happening. Briefly explain the plan if the threat does happen. How does it impact that system?
Prepare the journal entry to record the lease agreement : Prepare the journal entry to record the lease agreement on Jan 1, 2012 from the lessee's perspective. Record the first payment on Jan 1, 2012.
Discuss about the impact of technology on society : What experiences or reasons caused you to select and agree or disagree with the two points?
How you might address the dilemma : Then, give a plan for how you might address the dilemma. Be sure to reference a code of ethics relevant to your internship.
What are the tax consequences of transactions for barney : To satisfy the debt, she transferred title of the boat to the bank and paid an additional $5,000. What are the tax consequences of these transactions for Barney
How the given technology might relate to elderly care : What are your thoughts on how this technology might relate to elderly care? How might it need to change or improve?

Reviews

Write a Review

Accounting Basics Questions & Answers

  What are the criteria for recording contingencies

What are the criteria for recording contingencies? How do you value bonds? What factors can affect that value? What are the two methods for recording amortization of bond premiums and discounts? Which is best? Why?

  Arrival rate changed fairly gradually throughout the period

In the lunchtime rush example, the arrival rate changed fairly gradually throughout the period of interest Assume now that the arrival rate first increases and then decreases in a more abrupt manner.

  Calculate profitability and liquidity measures

Calculate profitability and liquidity measures. Presented here are the comparative balance sheets of Hames, Inc., at December 31, 2014 and 2013. Sales for the year ended December 31, 2014, totaled $870,000.

  A company reports basic earnings per share of 350 cash

1 a companys board of directors analyzes financial statements to assess future company prospects for making operating

  Prepare any adjusting entries required for the items

Prepare any adjusting entries required for the above items at December 31,2015. Assume the books for 2015 are still open, but all previous years are closed.

  Presenting annual report

What are the basic factors that must be considered in presenting annual report?

  Nash accounting services pays 2500 a month for tax

nash accounting services pays 2500 a month for a tax preparation software license. in addition variable charges

  What is the amount of the six annual deposits

ABC Co. borrowed $750,000 on January 1, 2010 to purchase new machines. What is the amount of the six annual deposits that ABC needs to make

  Calculate the residual income assume a target income of 10

alex and john are managers of two product lines for company. one of them is a candidate for promotion based on

  Prepare the journal entry or entries to record the disposal

On January 1, 2012, Skyline Limousine Co. purchased a limo at an acquisition cost of $28,000. The vehicle has been depreciated by the straight-line method using a 4-year service life and a $4,000 salvage value. The company's fiscal year ends on De..

  Logan products computes its predetermined overhead rate

logan products computes its predetermined overhead rate annually on the basis of direct labor-hours. at the beginning

  Prepare journal entries to record the issuance of the bonds

Prepare journal entries to record the issuance of the bonds and bond interest expense for 2017, assuming that the bonds sold at 97

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd