Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021.

image text in transcribed
image text in transcribed
American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. The lease agreement for the $4 million (fair value and present value of the lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to be four years with no residual value. Barton and Barton's implicit interest rate was 10%. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2021. 2. Prepare an amortization schedule for the four-year term of the lease. 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 and 4 Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to the nearest whole dollar) No Date General Journal Debat Credit 1 December 31, 202 interest expense 400,000 Lease payable 861,881 Cash 1,261.881 2 December 31, 202, No journal entry required > 0 Prepare the appropriate entries related to the lease on December 31, 2021 and 2023. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to the nearest Whole dollar) No Date General Journal Credit 1 Debit 400,000 December 31, 202 Interest expense Lease payable Cash 861,881 Oo 1,251,881 2 December 31, 202 No journal entry required 03 3 December 31, 202 Interest expense Lease payable Cash OOO 219,005 1,042,876 1,281,881 4 December 31, 202 No journal entry required O

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

More Books

Students also viewed these Accounting questions

Question

How has the competition changed within the last three years?

Answered: 1 week ago

Question

What lessons can be learned from such cases?

Answered: 1 week ago