Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

need help with these questions Jinx, Incorporated, manufactured a machine on January 1, 2022, for $250,000; the machine had a sales price of $270,000. The

need help with these questions
image text in transcribed
Jinx, Incorporated, manufactured a machine on January 1, 2022, for $250,000; the machine had a sales price of $270,000. The machine was leased to Pine Company (lessee) under a lease whereby Pine paid the first lease payment on January 1, 2022, and agreed to pay three more such annual rentals. At the end of the four-year lease term, the machine will revert to the lessor, at which time it is expected to have a residual value of $20,000 (none of which was guaranteed by the lessee or by any other party). The lessor's implicit interest rate was 10%. Required: 1. Give all of the entries for the lessor and the lessee for 2022. 2. How much will the Lease Receivable for the Lessor and Lease Liability for the Lessee be amortized to at the end of the lease term? 3. What is the total interest revenue for the Lessor and total interest expense for the lessee arising from this lease transaction? 4. Prepare the Statement of Cash Flows for the Lessee for the 4 years 2022-2025 pertaining to the lease payments. Use the Direct Method. 5. Assume that the lessee's tax deduction each period is equal to the lease payments, and the lessee does not record any ROU asset or lease liability on the tax returns for the duration of the lease. The marginal tax rate is 20% for all years. Prepare the 2022 deferred tax entries for the Lessee for the year 2022. 6. Give entries for the lessor at end of the lease, assuming the machine has a value of $14,000. How would the lessor's entries differ at the end of the lease term if the actual market value of the machine tumed out to be $23,000 (instead of the estimated residual value of $20,000)

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

Frank Woods Business Accounting

Authors: Frank Wood, Alan Sangster

9th Edition

0273655523, 9780273655527

More Books

Students also viewed these Accounting questions

Question

Discuss the goals of financial management.

Answered: 1 week ago

Question

Understand how people development is used to retain talent.

Answered: 1 week ago