Question
On December 31, 2017, Pool Corporation leased a machine from Renn Company for an eight-year period expiring December 30, 2025. Equal annual payments of $200,000
On December 31, 2017, Pool Corporation leased a machine from Renn Company for an eight-year period expiring December 30, 2025. Equal annual payments of $200,000 are due on December 31 of each year, beginning with December 31, 2017. The lease is properly classified as a finance lease on Pool's books and a sales type lease on Renns books. Renn manufactured the machine for $950,000 .The present value at December 31, 2017 of the eight lease payments over the lease term discounted at 10% is $1,173,685. Show all computations.
- Prepare a lease amortization schedule for 12/31/17, 12/31/18 and 12/31/19.
- Prepare Pools (lessee) journal entries for 12/31/17, 12/31/18 and 12/31/19.
- Prepare Renns (lessor) journal entries for 12/31/17, 12/31/18 and 12/31/19.
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Fundamentals of corporate finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
10th edition
978-1260013955, 78034639, 978-0078034633
