Bramble Corporation entered into a lease agreement on January 1, 2020, to provide Cullumber Company with a piece of machinery. The terms of the lease agreement were as follows. 1. 2. 3. The lease is to be for 3 years with rental payments of $ 13,768 to be made at the beginning of each year. The machinery has a fair value of $ 60,000, a book value of $ 40,000, and an economic life of 8 years. At the end of the lease term, both parties expect the machinery to have a residual value of $ 25,000, none of which is guaranteed. The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset is not of a specialized nature. The implicit rate is 6%, which is known by Cullumber. Collectibility of the payments is probable. 4. 5. 6. Click here to view factor tables. Lease Expense Schedule (A) Straight-Line Expense (B) Interest on Lease Liability (C) Amortization of Right-of-Use Asset (and Liability) (A-B) Date 1/1/20 12/31/20 $ 13768 $ $ 2208 TA 11560 $[ [ [ 12/31/21 13768 1515 12253 12/31/22 13768 779 12989 Lease Expense Schedule (A) ght-Line pense (B) Interest on Lease Liability (C) Amortization of Right-of-Use Asset (and Liability) (A-B) Carrying Value of Right-of-Use Asset $ 36802 13768 $ 2208 $ 11560 25242 13768 1515 12253 12989 13768 779 12989 0 Prepare the 2020 journal entries for Cullumber. (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 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to decimal places e.g. 58,971.) Date Account Titles and Explanation Debit Credit Jan. 1 Right-of-Use Asset 36802 Lease Liability 36802 (To record lease) Jan. 1 Lease Liability 13768 Cash 13768 (To record first lease payment) Dec. 31 Lease Expense 13768 Lease Liability 2208 Right-of-Use Asset 11560 (To record lease expense and amortization) Prepare the 2020 journal entries for Bramble. (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 Ofor the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to decimal places eg. 58,971.) Date Account Titles and Explanation Debit Credit Jan. 1 cash 13768 13768 (To record lease payments) Dec. 31 13768 Lease Revenue 13768 (To record lease revenue) Dec. 31 Depreciation Expense 5000 Accumulated Depreciation-Leased Machinery 5000 (To record depreciation) Suppose the lease were only for one year instead of 3 years, with just one lease payment at the beginning of the lease term. Prepare any journal entries Cullumber would need, assuming it elects to use the short-term lease option. (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 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to decimal places eg. 58,971.) Date Account Titles and Explanation Debit Credit Jan. 1 13768 Cash 13768
