Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

133 points Haulers Ca signed a lease on January 1 with Gandolfini Bank for a garbage truck. The truck is not specialized in nature. The

image text in transcribed
133 points Haulers Ca signed a lease on January 1 with Gandolfini Bank for a garbage truck. The truck is not specialized in nature. The lease has a 10-year term with no purchase option or transfer of ownership. Under the terms of the contract, Haulers must pay $16.500 on January 1 of each year. The truck has an economic life of 40 years and a fair value of $173.000. If Haulers borrowed at J Bank. the loan would carry an interest rate of 7%, which implies that the present value of the payments due under the lease is $124,000. The expected residual value at the end of the lease term is 596,000. The lessee guarantees the entire residual value. The lessee and the lessor do not incur any initial direct costs. The carrying value of the truck in Gandolfini Bank's inventory was $112.000. Prepare the journal entries for the lessor at the commencement of the lease. Check all of the answers that apply. Dr. Cost of poods sold - $112.000 Dr. Net investment in the lease-sales type-5173.000 Sales revenue - 5124 DOO Inventory --$112.000 De Net investment in the lease direct financing -- 5124000 Deferred proht 549.000 De Cost of ons vold-516.000 Dr. Net investment in the sales type - 5124.000 Dr. Netinestret in the secret financing - 5173.000 Ct Sales - 5171.000 OBOBO 133 points Haulers Ca signed a lease on January 1 with Gandolfini Bank for a garbage truck. The truck is not specialized in nature. The lease has a 10-year term with no purchase option or transfer of ownership. Under the terms of the contract, Haulers must pay $16.500 on January 1 of each year. The truck has an economic life of 40 years and a fair value of $173.000. If Haulers borrowed at J Bank. the loan would carry an interest rate of 7%, which implies that the present value of the payments due under the lease is $124,000. The expected residual value at the end of the lease term is 596,000. The lessee guarantees the entire residual value. The lessee and the lessor do not incur any initial direct costs. The carrying value of the truck in Gandolfini Bank's inventory was $112.000. Prepare the journal entries for the lessor at the commencement of the lease. Check all of the answers that apply. Dr. Cost of poods sold - $112.000 Dr. Net investment in the lease-sales type-5173.000 Sales revenue - 5124 DOO Inventory --$112.000 De Net investment in the lease direct financing -- 5124000 Deferred proht 549.000 De Cost of ons vold-516.000 Dr. Net investment in the sales type - 5124.000 Dr. Netinestret in the secret financing - 5173.000 Ct Sales - 5171.000 OBOBO

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Information Systems Connecting Careers Systems And Analytics

Authors: Arline A. Savage, Danielle Brannock, Alicja Foksinska

1st Edition

1119744474, 9781119744474

More Books

Students also viewed these Accounting questions