(d) Your Answer Correct Answer (Used) Prepare the journal entries Concord would make in 2020 and 2021 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to O decimal places e.g. 58,972. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit /20 V Right-of-Use Asset 719.748 Lease Liability 719.748 (To record the lease.) Lease Liability 137,605 Cash 137,605 (To record lease payment.) 31/20 V Amortization Expense 102,821 Right-of-Use Asset 102,821 (To record amortization.) Interest Expense 64,036 Lease Liability 64,036 (To record interest.) 21 Lease Liability 137,605 Cash 137,605 31/21 V Amortization Expense 102,821 Right-of-Use Asset 102,821 (To record amortization.) Interest Expense 55,943 Lease Liability 55,943 (To record interest.)(e) Prepare the journal entries Skysong would make in 2020 and 2021 related to the lease arrangement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 58,972. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Cred V (To record the lease.) V (To record lease payment.) V V V eTextbook and Media List of Accounts Save for Later Attempts: 0 of 4 used Submit Answer Using multiple attempts will impact your score. 50% score reduction after attempt 3Question 2 of 6 3 3.25 / 6.5 View Policies Show Attempt History Current Attempt in Progress Skysong Leasing Company agrees to lease equipment to Concord Corporation on January 1, 2020. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2. The cost of the machinery is $541,000, and the fair value of the asset on January 1, 2020, is $740,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $45,000. Concord estimates that the expected residual value at the end of the lease term will be 45,000. Concord amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2020. 5. The collectibility of the lease payments is probable. Skysong desires a 10%% rate of return on its investments. Concord's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. (Assume the accounting period ends on December 31) Click here to view factor tables. [a) Your answer is correct. Discuss the nature of this lease for both the lessee and the lessor. This is a finance lease for Concord. This is a sales-type lease for Skysong. eTextbook and Media List of Accounts Attempts: 2 of 4 used Using multiple attempts will impact your score. 50% score reduction after attempt 3 [b) Your answer is correct. Calculate the amount of the annual rental payment required. (Round present value factor calculations to 5 decimal places, e.g. 125124 and the final answer to O decimal places e.g. 58,972) Annual rental payment 137.604 eTextbook and Media List of Accounts Attempts: 3 of 4 used Using multiple attempts will impact your score. 50% score reduction after attempt 3 [c) Your answer is correct. Compute the value of the lease liability to the lessee. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,972) Present value of minimum lease payments $ 719 743 e Textbook and Media List of Accounts Attempts: 3 of 4 used Using multiple attempts will impact your score. 50% score reduction after attempt 3
