Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Metlock Leasing Company signs a lease agreement on January 1, 2025, to lease electronic equipment to Ivanhoe Company. The term of the non-cancelable lease is

Metlock Leasing Company signs a lease agreement on January 1, 2025, to lease electronic equipment to Ivanhoe 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. 2. Ivanhoe has the option to purchase the equipment for $16,500 upon termination of the lease. It is not reasonably certain that Ivanhoe will exercise this option. The equipment has a cost of $130,000 and fair value of $161,000 to Metlock Leasing. The useful economic life is 2 years, with a residual value of $16,500. 3. Metlock Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Metlock Leasing is probable. Prepare the journal entries on the books of Metlock Leasing to record the payments received under the lease and to recognize income for the years 2025 and 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places eg. 5,275.) Date 1/1/25 12/31/25 12/31/26 Account Titles and Explanation Debit Credit

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

Step: 3

blur-text-image

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

Financial Information Analysis 2e

Authors: Philip ORegan

2nd Edition

0470865725, 978-0470865729

More Books

Students also viewed these Accounting questions