Dunlap Company leased a large copier to Rust Company for a three-year period. Dunlap paid $27,000...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Dunlap Company leased a large copier to Rust Company for a three-year period. Dunlap paid $27,000 for the copier and immediately leased it on January 1, 2020 (estimated useful life is four years, and Dunlap expects the expected residual value at the end of the lease term is $5,400). Dunlap used an expected rate of return of 6% (known by Rust). The lessee agreed to guarantee two-thirds ($3,600) of the residual value. The first lease payment is due on January 1, 2020, and the accounting periods for both entities end on December 31. At the lease termination date, an independent appraiser provided an estimated residual value of $2,700. The lessee immediately paid the difference of $900 ($3,600 guaranteed residual value minus $2,700, the actual residual value). Required a. Compute the lease payment for the lessor and the lease receivable to be capitalized by the lessor. Note: Round answer to the nearest dollar. Note: Do not use a negative sign with your answer. Lease payment s Lease receivable s 7,929 27,000 Journal Entries: Collection is Probable Journal Entries: Collection is Not Probable b. Provide the entries for the lessor on January 1, 2020. Note: Round your answers to the nearest whole dollar Account Name Date Jan 1, 2020 Lease Receivable Inventory To record lease recelsable Jan 1, 2020 Cash BU 0 Lease Receivable To recont receipt of lease payment M Dr. 27,000 0 7.929 05 Cr. DU 27,000 7,929 G Recording Sales-Type Lease, Residual Value-Lessor Dunlap Company leased a large copier to Rust Company for a three-year period. Dunlap paid $27,000 for the copier and immediately leased it on January 1, 2020 (estimated useful life is four years, and Dunlap expects the expected residual value at the end of the lease term is $5,400). Dunlap used an expected rate of return of 6% (known by Rust). The lessee agreed to guarantee two-thirds ($3,600) of the residual value. The first lease payment is due on January 1, 2020, and the accounting periods for both entities end on December 31. At the lease termination date, an independent appraiser provided an estimated residual value of $2,700. The lessee immediately paid the difference of $900 ($3,600 guaranteed residual value minus $2,700, the actual residual value). Required a. Compute the lease payment for the lessor and the lease receivable to be capitalized by the lessor • Note: Round answer to the nearest dollar. • Note: Do not use a negative sign with your answer. Lease payment Lease receivable 7.929 27,000 Joumal Entries: Collection is Probable Journal Entries: Collection is Not Probable d. Instead assume that the collectibility of the lease payments by Rust Company was not probable. Record the required entry on January 1, 2020. Date Account Name Cr. Jan 1, 2020 Cash Check interest Revenue Dr. 0x 0 Dunlap Company leased a large copier to Rust Company for a three-year period. Dunlap paid $27,000 for the copier and immediately leased it on January 1, 2020 (estimated useful life is four years, and Dunlap expects the expected residual value at the end of the lease term is $5,400). Dunlap used an expected rate of return of 6% (known by Rust). The lessee agreed to guarantee two-thirds ($3,600) of the residual value. The first lease payment is due on January 1, 2020, and the accounting periods for both entities end on December 31. At the lease termination date, an independent appraiser provided an estimated residual value of $2,700. The lessee immediately paid the difference of $900 ($3,600 guaranteed residual value minus $2,700, the actual residual value). Required a. Compute the lease payment for the lessor and the lease receivable to be capitalized by the lessor. Note: Round answer to the nearest dollar. Note: Do not use a negative sign with your answer. Lease payment s Lease receivable s 7,929 27,000 Journal Entries: Collection is Probable Journal Entries: Collection is Not Probable b. Provide the entries for the lessor on January 1, 2020. Note: Round your answers to the nearest whole dollar Account Name Date Jan 1, 2020 Lease Receivable Inventory To record lease recelsable Jan 1, 2020 Cash BU 0 Lease Receivable To recont receipt of lease payment M Dr. 27,000 0 7.929 05 Cr. DU 27,000 7,929 G Recording Sales-Type Lease, Residual Value-Lessor Dunlap Company leased a large copier to Rust Company for a three-year period. Dunlap paid $27,000 for the copier and immediately leased it on January 1, 2020 (estimated useful life is four years, and Dunlap expects the expected residual value at the end of the lease term is $5,400). Dunlap used an expected rate of return of 6% (known by Rust). The lessee agreed to guarantee two-thirds ($3,600) of the residual value. The first lease payment is due on January 1, 2020, and the accounting periods for both entities end on December 31. At the lease termination date, an independent appraiser provided an estimated residual value of $2,700. The lessee immediately paid the difference of $900 ($3,600 guaranteed residual value minus $2,700, the actual residual value). Required a. Compute the lease payment for the lessor and the lease receivable to be capitalized by the lessor • Note: Round answer to the nearest dollar. • Note: Do not use a negative sign with your answer. Lease payment Lease receivable 7.929 27,000 Joumal Entries: Collection is Probable Journal Entries: Collection is Not Probable d. Instead assume that the collectibility of the lease payments by Rust Company was not probable. Record the required entry on January 1, 2020. Date Account Name Cr. Jan 1, 2020 Cash Check interest Revenue Dr. 0x 0
Expert Answer:
Related Book For
Fundamental Accounting Principles Volume II
ISBN: 978-1260305838
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
Posted Date:
Students also viewed these accounting questions
-
What is the value at the end of year 3 of the following cash flow stream if the quoted interest rate is 10 percent, compounded semiannually? MINI CASE Assume that you are nearing graduation and that...
-
Security A has an expected rate of return of 6 percent, a standard deviation of expected returns of 30 percent, a correlation coefficient with the market of - 0.25, and a beta coefficient of 0.5....
-
Congratulations! Your portfolio returned 11% last year, 2% better than the market return of 9%. Your portfolio had a standard deviation of earnings equal to 18%, and the risk-free rate is equal to...
-
Verizon Communications, Inc., is one of the worlds largest providers of communication services. The following information, taken from the companys annual reports, is available for the years 2013,...
-
Explain the term customer relationship management (CRM).
-
What is the probability that a player (not the dealer) is dealt an initial hand worth 21 points? This can only happen with an ace and a card worth 10 points ( \(10, \mathrm{~J}, \mathrm{Q}\), or K).
-
Mulberry Sporting Goods is authorized to issue 18,000 shares of common stock . During a two-month period, Mulberry completed these stock-issuance transactions: Apr 23 Issued 4,000 shares of $1.00 par...
-
L EXERCISE 15.1 This exercise resembles the preceding exercise. The variables in this case are: 1) the gender of automobile drivers, 2) whether they have driven "many" miles in their lives or "few"...
-
Of all the price analysis methodologies that exist, which are the foundational methods. Longing & Shorting. Trading & Investing. Volume & sentiment. On-chain & Macroeconomic. Mean reversion &...
-
Evaluate inverse Z-transform for system H(z) shown below. Show your calculation in detail. H(z) = = 0.5z 0.02z - 0.3 + z- If the input signal to the system is x(n) = 0.58 (n-3), compute the output...
-
what ways does organizational culture, encompassing values, norms, and leadership styles, influence team cohesion, morale, and productivity, and how can organizations cultivate a culture that...
-
what ways do symbolic interactionist theories illuminate the processes of socialization and the construction of identity in diverse social contexts ?
-
Bob spent the entire 2 0 1 9 year in Tokyo. His annual salary was $ 9 0 , 0 0 0 and he paid $ 3 0 , 0 0 0 rent. What is the highest amount of foreign earned income and foreign housing expenses Bob...
-
Should content marketing (Blogs, News, Videos, Podcast, etc.) always include a "Call to Action" (CTA)? Why or why not? Also, how should one apply content marketing CTAs within an organization? Should...
-
calculate the tax in SAR for company supplier's that cost $1000.000 if you know the tax 15%?
-
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Percent of Per Unit Sales Selling price $ 100 100% Variable expenses 61 61...
-
Maria Castigliani is head of the purchasing department of Ambrosiana Merceti, a medium-sized construction company. One morning she walked into the office and said, The main problem in this office is...
-
Halifax Fisheries Inc. began the month of March with $760,000 of current assets, a current ratio of 2.5 to 1, and a quick ratio of 1.1 to 1. During the month, it completed the following transactions:...
-
Which of the following journal entries is appropriate to record the issuance of an organizations shares: a. Dr. Cash XXX, Cr. Owners Equity XXX b. Dr. Investment XXX, Cr. Common Shares XXX c. Dr....
-
Jackson Textiles had an outstanding account in the amount of $14,800 owing to Huang Manufacturing. On October 1, 2020, Huang agreed to convert Jacksons account to an 8%, 45-day note having a face...
-
During 20XB, Sunflower Energy incurs the following costs relating to Lease A, a producing property: REQUIRED: Determine the tax basis of any assets and the amount of any tax deductions. Supplies for...
-
Tiger Energy has the following information: The lease is subleased to Phil Oil Corporation for $300,000, and Tiger retains an 1/16 ORI. At the date of the sublease, the FMV of the equipment is...
-
Tiger Energy, an independent producer, has average production from Lease A of 100 bbl/ day in 20XA from Lease A. The average selling price of oil in 20XA is $58/ bbl. Net income from Lease A in 20XA...
Study smarter with the SolutionInn App