Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blossom Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal

image text in transcribed
image text in transcribed
image text in transcribed
Blossom Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $28,865 at the beginning of each year. The first payment is received on January 1, 2020. Blossom had purchased the machine during 2016 for $100,000. Collectibility of lease payments by Blossom is probable. Blossom set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Blossom at the termination of the lease. Click here to view factor tables. Compute the amount of the lease receivable. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places eg. 5.275.) Amount of the lease receivable $ Prepare all necessary journal entries for Blossom for 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to decimal places eg. 5,275.) Date Account Titles and Explanation Debit Credit 11/20 (To record the lease) (To record the first lease payment) 12/31/20 Suppose the collectibility of the lease payments was not probable for Blossom. Prepare the necessary journal entry for the company in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Date Account Titles and Explanation Debit Credit 1/1/20 e Textbook and Media List of Accounts Suppose at the end of the lease term, Blossom receives the asset and determines that it actually has a fair value of 5900 instead of the anticipated residual value of 50. Record the entry to recognize the receipt of the asset for Blossom at the end of the lease term. (Credit account titles are automatically indented when amount is entered. Do not Indent manually. Round answers to decimal places e... 5,275) Date Account Titles and Explanation Debit Credit 1/1/20

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

If p is a prime, prove that in Zp[x], aEZy

Answered: 1 week ago