INTERMEDIATE ACCOUNTING 2 - CHAPTER 21 LEASES

I ONLY NEED HELP WITH THE 2 BALANCE SHEETS

Blue Industries and Kingbird Inc. enter into an agreement that requires Kingbird Inc. to build three diesel-electric engines to Blues specifications. Upon completion of the engines, Blue has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is noncancelable, becomes effective on January 1, 2017, and requires annual rental payments of $431,633 each January 1, starting January 1, 2017. Blues incremental borrowing rate is 10%. The implicit interest rate used by Kingbird Inc. and known to Blue is 8%. The total cost of building the three engines is $2,693,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Blue depreciates similar equipment on a straight-line basis. At the end of the lease, Blue assumes title to the engines. Collectibility of the lease payments is reasonably certain; no uncertainties exist relative to unreimbursable lessor costs.

Feel free to check my numerical work though I am pretty sure it is all correct.

Just need the balance sheets filled out.

Show work.

Please & Thank you.

(b) Prepare the journal entry or entries to record the transaction on January 1, 2017, on the books of Blue Industries. (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 present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit Leased Equipment 3127997 Lease Liability 3127997 (c) Prepare the journal entry or entries to record the transaction on January 1, 2017, on the books of Kingbird Inc. (Credit account titles are automatically indented when amount is entered. Do not indent manually. lf no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,971.) Account Titles and Explanation Debit Credit Lease Receivable 3127997 2693000 3127997 nventory 2693000 (d) Prepare the journal entries for both the lessee and lessor to record the first rental payment on January 1, 2017. (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.,) Account Titles and Explanation Lessee (January 1, 2017) Debit Credit Lease Liability 431633 Cash 431633 Lessor (January 1, 2017) Debit Credit Cash 431633 Lease Receivable 431633 Prepare a lease amortization schedule for 2 years. (Round answers to 0 decimal places e.g. 58,971.) BLUE INDUSTRIES Lease Amortization Schedule Annual Lease Interest on Reduction in Lease Date ReceiptPayment Receivable/Liability Receivable/Liability Receivable/ Liability 3127997 431633 431633 2696643 431633 215731 215902 2480741 431633 198459 233174 2247567 Prepare the journal entries for both the lessee and lessor to record interest expense (revenue) at December 31, 2017. (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.) Account Titles and Explanation Lessee (December 31, 2017) Debit Credit Interest Expense 215731 Interest Payable 215731 Lessor (December 31, 2017) Debit Credit Interest Receivable 215731 Interest Revenue 215731 Show the items and amounts that would be reported on the balance sheet (not notes) at December 31, 2017, for both the lessee and the lessor. BLUE INDUSTRIES Balance Sheet (Partial) December 31, 2017 Asset Intangible Assets Less : Current Liability Current Liabilities KINGBIRD INC. Balance Sheet (Partial) December 31, 2017 Assets Current Assets Long-term Liabilties