Martinez Company, a machinery dealer, leased manufacturing equipment to Mays Corporation on January 1, 2017. The...
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Martinez Company, a machinery dealer, leased manufacturing equipment to Mays Corporation on January 1, 2017. The lease is for a 7-year period and requires equal annual payments of $20,786 at the beginning of each year. The first payment is received on January 1,2017. Martinez had purchased the machine during 2016 for $68,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Martinez. Martinez set the annual rental to ensure an 6% rate of return. The machine has an economic life of 8 years with no residual value and reverts to Martinez at the termination of the lease. Compute the amount of the lease receivable. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to O decimal places e.g. 58,971.) Lease Receivable $ Prepare all necessary journal entries for Martinez for 2017. (Round answers to O decimal places eg. 5,125. 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 O for the amounts.) Date Account Titles and Explanation Jan. 1, 2017 (To record sales revenue) (To record rental payment) Debit Credit Dec. 31, 2017 Martinez Company, a machinery dealer, leased manufacturing equipment to Mays Corporation on January 1, 2017. The lease is for a 7-year period and requires equal annual payments of $20,786 at the beginning of each year. The first payment is received on January 1,2017. Martinez had purchased the machine during 2016 for $68,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Martinez. Martinez set the annual rental to ensure an 6% rate of return. The machine has an economic life of 8 years with no residual value and reverts to Martinez at the termination of the lease. Compute the amount of the lease receivable. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to O decimal places e.g. 58,971.) Lease Receivable $ Prepare all necessary journal entries for Martinez for 2017. (Round answers to O decimal places eg. 5,125. 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 O for the amounts.) Date Account Titles and Explanation Jan. 1, 2017 (To record sales revenue) (To record rental payment) Debit Credit Dec. 31, 2017
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Related Book For
Intermediate Accounting IFRS
ISBN: 9781119607519
4th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
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