Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Exercise 115 Hayes Corp. is a manufacturer of truck trailers. On January 1, 2018, Hayes Corp. leases 9 trailers to Lester Company under a 5-year

image text in transcribedimage text in transcribed

Exercise 115 Hayes Corp. is a manufacturer of truck trailers. On January 1, 2018, Hayes Corp. leases 9 trailers to Lester Company under a 5-year noncancelable lease agreement. The following information about the lease and the trailers is provided: 1. 2. 3. 4. Equal annual payments that are due on January 1 each year provide Hayes Corp. with an 11% return on net investment (present value factor for 5 periods at 11% is 4.10245). Titles to the trailers pass to Lester at the end of the lease. The fair value of each trailer is $51,600. The cost of each trailer to Hayes Corp. is $46,500. Each trailer has an expected useful life of nine years. Collectibility of the lease payments is probable. Click here to view factor table. What type of lease is this for the lessor? Calculate the annual lease payment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Annual lease payment Prepare a lease amortization schedule for Hayes Corp. for the first three years. (Round answers to 0 decimal places e.g. 5,275.) Hayes Corp. Lease Amortization Schedule (Lessor) Interest on Lease Lease Annual Lease Rental Receivable Receivable Recovery Date Lease Receivable 1/1/18 1/1/18 1/1/19 1/1/20 Prepare the journal entries for the lessor for 2018 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Accou Debit Credit January 1, 2018 (To record the lease) January 1, 2018 (To record receipt of the first lease payments) December 31, 2018 (To record interest earned during the first year of the lease) Click if you would like to Show Work for this question: Open Show Work Exercise 115 Hayes Corp. is a manufacturer of truck trailers. On January 1, 2018, Hayes Corp. leases 9 trailers to Lester Company under a 5-year noncancelable lease agreement. The following information about the lease and the trailers is provided: 1. 2. 3. 4. Equal annual payments that are due on January 1 each year provide Hayes Corp. with an 11% return on net investment (present value factor for 5 periods at 11% is 4.10245). Titles to the trailers pass to Lester at the end of the lease. The fair value of each trailer is $51,600. The cost of each trailer to Hayes Corp. is $46,500. Each trailer has an expected useful life of nine years. Collectibility of the lease payments is probable. Click here to view factor table. What type of lease is this for the lessor? Calculate the annual lease payment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Annual lease payment Prepare a lease amortization schedule for Hayes Corp. for the first three years. (Round answers to 0 decimal places e.g. 5,275.) Hayes Corp. Lease Amortization Schedule (Lessor) Interest on Lease Lease Annual Lease Rental Receivable Receivable Recovery Date Lease Receivable 1/1/18 1/1/18 1/1/19 1/1/20 Prepare the journal entries for the lessor for 2018 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Accou Debit Credit January 1, 2018 (To record the lease) January 1, 2018 (To record receipt of the first lease payments) December 31, 2018 (To record interest earned during the first year of the lease) Click if you would like to Show Work for this question: Open Show Work

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

ISO 27001 Controls A Guide To Implementing And Auditing

Authors: IT Governance

1st Edition

1787781445, 978-1787781443

More Books

Students also viewed these Accounting questions

Question

Differentiate the function. r(z) = 2-8 - 21/2 r'(z) =

Answered: 1 week ago