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Hi, please help with the red circle part! Please provide the detailed solution of how you get these numbers. Thanks. Exercise 21A-10 a-d (Part Level
Hi, please help with the red circle part! Please provide the detailed solution of how you get these numbers. Thanks.
Exercise 21A-10 a-d (Part Level Submission) The following facts pertain to a non-cancelable lease agreement between Oriole Leasing Company and Sage Hill Company, a lessee. Commencement date Annual lease payment due at the beginning of May 1, 2017 each year, beginning with May 1, 2017 Bargain purchase option price at end of lease term Lease term Economic life of leased equipment Lessor's cost Fair value of asset at May 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate $17,225.30 $4,000 5 years 10 years 3%,000 $77,000 890 8% The collectibility of the lease payments by Oriole is probable. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (c) Your answer is correct Prepare a lease amortization schedule for Sage Hill for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) SAGE HILL COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Plus Interest on Liability Reduction of Lease Liability Date Lease Liability 77000 17225.30 0 17225.30 59774.7 17225.30 4782 12443.3 47331.4 17225.30 3786.5 13439 33892 5/1/20 5/1/21 4/30/22 2711 1550.24 296 17225.30 14514 19378 17225.30 15675 3703 4000 3703 0 90126.5 13126.44 77000 (d) Your answer is partially correct. Try again. Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2017 and 2018. Sage Hill's annual accounting period ends on December 31. Reversing entries are used by Sage Hill. (Credit account titles are autoiatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15.) Date Account Titles and Explanation Debit Credit 5/1/17 Leased Equipment 77000 77000 Lease Liability To record the lease) Lease Liability 17225.3 Cash 17225.3 (To record the first lease payment) 12/31/17 Interest Expense 3187.98 Interest Payable To record interest expense) Depreciation Expense 3187.98 5133.33 Accumulated Depreciation-Leased Equipment 5133.33 To record amortization of the right-of-use asset) 1/1/18 Interest Payable 3187.98 Interest Expense 3187.98 5/1/18 Interest Expense 4781.98 Lease Liability 17225.3 Cash 22007.28 12/31/18 Interest Expense 2269.3 Interest Payable 2269.3 (To record interest expense) Depreciation Expense 7700 Accumulated Depreciation-Equipment 7700 To record amortization of the right-of-use asset)Step by Step Solution
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