American Food Services, Incorporated leased a packaging machine from Barton and Barton Corporation. Barton and Barton...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
American Food Services, Incorporated leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2024. The lease agreement for the $4.4 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 11%. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1 Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2024. 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, 2024 and 2026. Journal entry worksheet < 1 2 Record the lease payment and interest expense for American Food Services. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2024 Lease payable 484,000 Cash Interest expense 1,526,048 484,000 Journal entry worksheet 2 Record the amortization for American Food Services. Note: Enter debits before credits. Date General Journal Debit Credit 484,000 December 31, 2024 Interest expense Interest payable 484,000 Record the lease payment and interest expense for American Food Services. Note: Enter debits before credits. Date December 31, 2026 Interest expense Lease payable Cash General Journal Debit Credit 291,689 1,100,000 1,391,689 Journal entry worksheet 2 3 4 Record the amortization for American Food Services. Note: Enter debits before credits. Date General Journal December 31, 2026 Interest expense Interest payable Debit Credit 291,689 291,689 American Food Services, Incorporated leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2024. The lease agreement for the $4.4 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 11%. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1 Required: 1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2024. 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, 2024 and 2026. Journal entry worksheet < 1 2 Record the lease payment and interest expense for American Food Services. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2024 Lease payable 484,000 Cash Interest expense 1,526,048 484,000 Journal entry worksheet 2 Record the amortization for American Food Services. Note: Enter debits before credits. Date General Journal Debit Credit 484,000 December 31, 2024 Interest expense Interest payable 484,000 Record the lease payment and interest expense for American Food Services. Note: Enter debits before credits. Date December 31, 2026 Interest expense Lease payable Cash General Journal Debit Credit 291,689 1,100,000 1,391,689 Journal entry worksheet 2 3 4 Record the amortization for American Food Services. Note: Enter debits before credits. Date General Journal December 31, 2026 Interest expense Interest payable Debit Credit 291,689 291,689
Expert Answer:
Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Posted Date:
Students also viewed these accounting questions
-
Required: The employee earnings record for Lyric Crosby of White Mountain Assessments is listed below. Record the earnings from the September 9 weekly pay in Problem 7-1A. The standard 40 hours...
-
Scotsburn Dairy Scotsburn Dairy's plant in Truro, Nova Scotia, makes over 300 types and sizes of ice cream and frozen yogurt products. The process is in two stages. In the first stage, a type of mix...
-
"The financial crisis revealed severe shortcomings in corporate governance.When most needed, existing standards failed to provide the checks and balances that companies need in order to cultivate...
-
Host A has a file of 49.5Kbytes to send to host C and host B has a file of 70.5Kbytes to send to host D, both using TCP. TCP connection 1 from A to C and TCP connection 2 from B to D share one...
-
a. H1: < 1.22 n = 23 = 0.025 b. H1: > 92.5 n = 12 = 0.10 c. H0: < 0.237 n = 16 = 0.05 Use Table A-4 to find the critical values of x2 based on the given information.
-
The lifetime of an electronic amplifier is modeled as an exponential random variable. If 10% of the amplifiers have a mean of 20,000 hours and the remaining amplifiers have a mean of 50,000 hours,...
-
Audit Regulation. Comment on the following statements: A. Audited financial statements are entirely accurate. B. An unqualified audit opinion guarantees that the audited company will remain in...
-
In an absorption tower (or absorber), a gas is contacted with a liquid under conditions such that one or more species in the gas dissolve in the liquid. A stripping tower (or stripper) also involves...
-
Mama's Fried Chicken bought equipment on January 2 , 2 0 2 4 , for $ 3 9 , 0 0 0 . The equipment was expected to remain in service for four years and to operate for 8 , 2 5 0 hours. At the end of the...
-
= Homework: Week Two Question 6, BE16-17 (similar to) HW Score: 1.82%, 0.4 of 22 points Points: 0 of 1 Save For each debt investment in the table below, compute the impairment loss, if any, and...
-
Show how the given percentage was derived based on the sample data. Write 1-2 sentences explaining how the confidence interval would be interpreted. Based on this interval, provide one value that...
-
The Twain Mill Company has issued rights to its shareholders.The stock is currently selling for $20 rights-on.The subscription price on the rights offering is $18.Three rights are required to...
-
What role does ethical stewardship play in shaping leadership efficacy, particularly in fostering trust, transparency, and accountability within organizational frameworks ?
-
Company Profile brief profile of the company you are assigned to including a description of their products or services and the markets they compete. Summary of their stock performance in the last...
-
Suppose you have $ 7 5 0 0 and plan to purchase a 1 5 - year certificate of deposit ( CD ) that pays 0 . 0 7 interest, compounded annually. How much will you have when the CD matures? Write your...
-
??????? requirements and \( N P V \) sor the projects: Given a wide variety of staffing needs, the company has also estimated the number of research scientists required for each development project...
-
For Problem estimate the change in y for the given change in x. y = f(x), f'(12) = 30, x increases from 12 to 12.2
-
Andrea Lima is attempting to sell her business to Alfonso Moreno. The company has assets of $1,800,000, liabilities of $1,600,000, and stockholders equity of $200,000. Both parties agree that the...
-
When faced with lawsuits, many companies recognize a loss and therefore credit a liability or reserve account for any future losses that may result. For instance, in the famous WorldCom case,...
-
Rothberg Corporations management took the following actions, which went into effect on January 2, 20x7. Each action involved an application of the time value of money. a. Established a new retirement...
Study smarter with the SolutionInn App