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, 2018, 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 $1,044,762. 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 $6,000 beginning December 31, 2018 Progressive insurance Company charges Branf $6,000 annually for hazard insurance coverage on the equipment. Both companies use straight-line depreciation or amortization (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: Prepare the appropriate entries for both the lessee and lessor to record the second lease payment and depreciation on December 31, 2019, 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 $105,000. 2. The contract specifies that the lessor pays maintenance costs as incurred. The lessee's lease payments were increased to $111,000 to include an amount sufficient to reimburse these costs. 3. The lessee's lease payments of $111,000 included $6,000 for hazard insurance on the equipment rather than maintenance. Complete this question by entering your answers in the tabs below. Required 1 Lessee Required 1 Lessor Required 2 Lessee Required 2 Lessor Required 3 Lessee Required 3 Lessor The lessee's lease payments of $111,000 included $6,000 for hazard insurance on the equipment rather than maintenance. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Round your intermediate and final state dolari LU Ciuue dil din OUIIL SUICIIL TIDurse ulese LUSS. 3. The lessee's lease payments of $111,000 included $6,000 for hazard insurance on the equipment rather than maintenance. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 1 Required 2 Required 2 Required 3 Required 3 Lessee Lessor Lessee Lessor Lessee Lessor The lessee's lease payments of $111,000 included $6,000 for hazard insurance on the equipment rather than maintenance. (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.) No Event General Journal Debit Credit 1 1 Interest expense Lease payable Cash 111,000 2 2 Amortization expense Right-of-use asset OO The lessee's lease payments of $111,000 included $6,000 for hazard insurance on the equipment rather than maintenance. (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 Record cash received Note: Enter debits before credits Event Credit Debit 111,000 1 General Journal Cash Interest revenue Lease receivable Record entry clear entry View.generall ournal
