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Kingbird Steel Company as lessee signed a lease agreement for equipment for 5 years, beginning December 31, 2017. Annual rental payments of $62,000 are to
Kingbird Steel Company as lessee signed a lease agreement for equipment for 5 years, beginning December 31, 2017. Annual rental payments of $62,000 are to be made at the beginning of each lease year (December 31). The taxes, insurance, and the maintenance costs are the obligation of the lessee. The interest rate used by the lessor in setting the payment schedule is 9%; Kingbird's incremental borrowing rate is 11%. Kingbird is unaware of the rate being used by the lessor. At the end of the lease, Kingbird has the option to buy the equipment for $1, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Kingbird uses the straight-line method of depreciation on similar owned equipment ere view factor tables Prepare the journal entries, that should be recorded on December 31, 2017, by Kingbird. (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 0 decimal places e.g. 58,971.) Date Account Tites and Explanation Debit Credit December 31, 2017 (To record the lease.) (To record the first payment.) SHOW OF OUN LINK TO TEXT Prepare the journal entries, that should be recorded on December 31, 2018, by Kingbird. (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.) Date Account Tites and Explanation Debit Credit December 31, 2018 (To record depreciation.)
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