Accounting Problem

Instructions

Com plete Question 5.png, Use the List of Accounts below

List of Accounts

• ?Accounts Payable
• Accounts Receivable
• Accumulated Depreciation - Leased Buildings
• Accumulated Depreciation - Buildings
• Accumulated Depreciation - Leased Equipment
• Accumulated Depreciation - Rental Equipment
• Accumulated Depreciation - Right-of-Use Asset
• Accumulated Depreciation - Software under Lease
• Accumulated Depreciation - Vehicles
• Accumulated Depreciation - Vehicles under Lease
• Amortization Expense
• Buildings
• Buildings under Lease
• Cash
• Cost of Goods Sold
• Deferred Profit on Sale-Leaseback
• Depreciation Expense
• Equipment
• Equipment Acquired for Lessee
• Equipment under Lease
• Insurance Expense
• Insurance Payable
• Insurance Revenue
• Interest Expense
• Interest Income
• Interest Payable
• Interest Receivable
• Inventory
• Land Rental Expense
• Land under Lease
• Lease Liability
• Lease Receivable
• Legal Expense
• Loss on Lease
• Low Value Lease Expense
• No Entry
• Obligations under Lease
• Operating Expenses
• Prepaid Expenses
• Prepaid Insurance
• Prepaid Rent
• Property Tax Expense
• Rent Expense
• Rental Equipment
• Rent Payable
• Rent Receivable
• Rent Revenue
• Repairs and Maintenance Expense
• Right-of-Use Asset
• Sales Revenue
• Selling Expenses
• Short-Term Lease Expense
• Software under Lease
• Unearned Interest Income
• Unearned Rent Revenue
• Vehicles
• Vehicles under Lease

Question 5.png

Pharoah Corp. agreed to lease property from Bonita Corp. effective January 1, 2020, for an annual payment of $25,592, beginning January 1, 2020. The property is made up of land with a fair value of $108,000 and a two-storey office building with a fair value of $166,000 and a useful life of 25 years with no residual value. The implicit interest rate is 9%, the lease term is 25 years, and title to the property will not be transferred to Pharoah by the end of the lease term. Assume that there is also no bargain purchase option, but that the lease does meet other criteria to qualify as a capital lease. Both Pharoah and Bonita use ASPE. Prepare the required entries made by Pharoah Corp. on January 1, 2020, and at its year end of December 31, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit (To record inception of lease.) Jan. 1 (To record first lease payment.) (To record interest.) (To record depreciation expense.)