Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Laporte Engineering Company leased a machine on January 1, 2020, under a contract calling for four annual payments of $80,000 on December 31, 2020 through

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Laporte Engineering Company leased a machine on January 1, 2020, under a contract calling for four annual payments of $80,000 on December 31, 2020 through 2023. The machine becomes the property of the lessee after the fourth payment. The machine was predicted to have a service life of six years and no residual value, and the interest rate avallable to Laporte Engineering was 12% on the day the lease was signed. The machine was delivered on January 10, 2020, and was immediately placed in service Required: 1. Determine the initial net liability created by the lease and the cost of the leased asset. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) it into the net hility 2. Prepare a table showing the calculation of the amount of interest expense allocated to each year the lease is in effect and the carrying amount of the liability at the end of each of those years. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Enter all the amounts as positive values.) Payments Beginning Net Liability Year Payment Interest Expense Reduction in Lease Liability Lease Liability at End of Year 2020 2021 2022 0 2023 0 Total expense 2. Problems 3. Prepare the entry to record the leasing of the machine. (Do not round Intermediate calculations. Round the final answers nearest whole dollar.) View transaction list Journal entry worksheet 1 Record signing of lease agreement. Note: Enter debits before credits. Date General Journal Debit Credit Jan 01, 2020 Record entry Clear entry View general Journal 4. Prepare entries that would be made on December 31, 2021, to record the annual depreciation on a straight-line basis, an recording of the lease payment. Also show how the machine and the lease liability should appear on the December 31, 20 sheet. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Enter all amounts as p values.) View transaction list Journal entry worksheet 1 2. Record the depreciation on leased machinery. Note: Enter debits before credits. Debit Credit Date General Journal Dec 31, 2021 View general Journal Record entry Clear entry View general Journal LAPORTE ENGINEERING COMPANY Partial Balance Sheet December 31, 2021 Property, plant and equipment Current liabilities Non-current liabilities Dr

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Fraud Prevention And Detection

Authors: Joseph T. Wells

5th Edition

1119351987, 9781119351986

More Books

Students also viewed these Accounting questions