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Branif Leasing leases mechanical equipment to industrial consumers under sales-type leases that earn Branif a 9% rate of return for providing long-term financing. A lease
Branif Leasing leases mechanical equipment to industrial consumers under sales-type leases that earn Branif a 9% rate of return for providing long-term financing. A lease agreement with Branson Construction specified 20 annual payments beginning December 31, 2024, the beginning of the lease. The estimated useful life of the leased equipment is 20 years with no residual value. Its cost to Branif was $1,144,263. The lease qualifies as a finance lease to Branson. Maintenance of the equipment was contracted for through a 20-year service agreement with Midway Service Company requiring 20 annual payments of $4,000 beginning December 31, 2024. Progressive insurance Company charges Branif $4,000 annually for hazard insurance coverage on the equipment. Both companies use straight-line depreciation or amortization. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1. EVAD of $1 and PVAD of $1). Required: Prepare the appropriate entries for both the lessee and lessor to record the second lease payment and depreciation on December 31, 2025, under each of three independent assumptions: 1. The lessee pays maintenance costs as incurred. The lessor pays insurance premiums as incurred. The lease agreement requires annual payments of $115,000. 2. The contract specifies that the lessor pays maintenance costs as incurred. The lessee's lease payments were increased to $119,000 to include an amount sufficient to reimburse these costs. 3. The lessee's lease payments of $119,000 included $4,000 for hazard insurance on the equipment rather than maintenance. Complete this question by entering your answers in the tabs below. Required 1 Required 1 Lessee Lessor Required 2 Lessee Required 2 Lessor Required 3 Required 3 Lessee Lessor The lessee pays maintenance costs as incurred. The lessor pays insurance premiums as incurred. The lease agreement requires annual Homework Complete this question by entering your answers in the tabs below. Lessor Required 1 Required 1 Required 2 Lessee Lessee Required 2 Lessor Required 3 Lessee Required 3 Lessor Saved The lessee pays maintenance costs as incurred. The lessor pays insurance premiums as incurred. The lease agreement requires annual payments of $115,000. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar. View transaction list Journal entry worksheet < 1 2 3 Record cash payment. Note: Enter debits before credits. Date December 31, 2025 General Journal Debit Credit < Prev 10 of 12 Next > Show less A Required 1 Lessee Required 1 Required 2 Required 2 Lessor Lessee Lessor Required 3 Lessee Required 3. Lessor The lessee pays maintenance costs as incurred. The lessor pays insurance premiums as incurred. The lease agreeme payments of $115,000. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Rour and final answers to nearest whole dollar. View transaction list Journal entry worksheet Record cash received. Note: Enter debits before credits. Date December 31, 2025 General Journal Debit Credit Required 1 Required 1 Lessee Required 2 Required 2 Lessor Lessee Lessor Required 3 Lessee Required 3 Lessor The contract specifies that the lessor pays maintenance costs as incurred. The lessee's lease payments were increased include an amount sufficient to reimburse these costs. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Rounc and final answers to nearest whole dollar. View transaction list Journal entry worksheet < 2 Record cash payment. Note: Enter debits before credits. Date December 31, 2025 General Journal Debit Credit Required 1 Lessee Required 1 Required 2 Required 2 Lessor Lessee Lessor Required 3 Lessee Required 3 Lessor The contract specifies that the lessor pays maintenance costs as incurred. The lessee's lease payments were increased include an amount sufficient to reimburse these costs. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round and final answers to nearest whole dollar. View transaction list Journal entry worksheet 1 Record cash received. Note: Enter debits before credits. Date December 31, 2025 General Journal Debit Credit < Prev 10 of 12 Required 1 Required 1 Lessee Required 2 Lessor Lessee Required 2 Lessor Required 3 Lessee Required 3 Lessor The lessee's lease payments of $119,000 included $4,000 for hazard insurance on the equipment rather than ma Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. and final answers to nearest whole dollar. View transaction list Journal entry worksheet < 1 2 Record cash payment. Note: Enter debits before credits. Date December 31, 2025 General Journal Debit Credit Required 1 Lessee Required 1 Required 2 Required 2 Lessor Lessee Lessor Required 3 Lessee Required 3 Lessor The lessee's lease payments of $119,000 included $4,000 for hazard insurance on the equipment rather than maintenance. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your interm and final answers to nearest whole dollar. View transaction list Journal entry worksheet 1 Record cash received. Note: Enter debits before credits. Date December 31, 2025 General Journal Debit Credit
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