Question
Kate Co. leased a warehouse from Big Dave Industries on July 1, 2018, in a finance lease. The present value of the lease payments discounted
Kate Co. leased a warehouse from Big Dave Industries on July 1, 2018, in a finance lease. The present value of the lease payments discounted at 10% was $160,000. Ten annual lease payments of $24,000 are due each July1, beginning July 1, 2018. Big Dave had constructed the equipment recently for $132,000 and its retail fair value was $160,000. Required: Assuming that control of the warehouse is transferred to KateCo at the beginning of the lease. Prepare the two journal entries to record the lease by Big Dave at July 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.)
Journal Entries:
1. Record the lease payment.
2. Record cash received.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started