Question
Kingbird Leasing Company signs a lease agreement on January 1, 2020, to lease warehouse equipment to Blossom Company. The term of the non-cancelable lease is
Kingbird Leasing Company signs a lease agreement on January 1, 2020, to lease warehouse equipment to Blossom Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:
1. Blossom has the option to purchase the equipment for $ 20,300 upon termination of the lease. It is not reasonably certain that Blossom will exercise this option.
2. The equipment has a cost of $ 164,000 and fair value of $ 189,000 to Kingbird Leasing. The useful economic life is 2 years, with a residual value of $ 20,300.
3. Kingbird Leasing desires to earn a return of 6% on its investment.
4. Collectibility of the payments by Kingbird Leasing is probable.
Prepare the journal entries on the books of Kingbird to recognize the establishment of the lease and the receipt of payments in 2020 and 2021. Do not include the return of the equipment at lease termination. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.)
| Date | Account Titles and Explanation | Debit | Credit | |
|---|---|---|---|---|
| enter an account title | enter a debit amount | enter a credit amount | |
| enter an account title | enter a debit amount | enter a credit amount | ||
| enter an account title | enter a debit amount | enter a credit amount | ||
| enter an account title | enter a debit amount | enter a credit amount | ||
| choose a transaction date 1/1/2012/31/2012/31/21 | enter an account title | enter a debit amount | enter a credit amount | |
| enter an account title | enter a debit amount | enter a credit amount | ||
| enter an account title | enter a debit amount | enter a credit amount | ||
| choose a transaction date 1/1/2012/31/2012/31/21 | enter an account title | enter a debit amount | enter a credit amount | |
| enter an account title | enter a debit amount | enter a credit amount | ||
| enter an account title | enter a debit amount | enter a credit amount |
Assuming that Blossom exercise its option tp purchase the equipment on December 31, 2020, prepare the journal entry to record the sales on Kingbird's books.
| choose a transaction date 12/31/20 | enter an account title | enter a debit amount | enter a credit amount |
|---|---|---|---|
| enter an account title | enter a debit amount | enter a credit amount |
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Sustainability Accounting And Accountability
Authors: Matias Laine, Helen Tregidga, Jeffrey Unerman
3rd Edition
1032023104, 9781032023106
