Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On Jan. 1, 2051, Salomon Sports signed a lease agreement to use an industrial equipment for the next three years. The equipment has a useful

On Jan. 1, 2051, Salomon Sports signed a lease agreement to use an industrial equipment for the next three years. The equipment has a useful life of three years, and the straight-line depreciation method will be used. The lease is qualified for a financial lease and requires an annual lease payment of $40,211.48 at the end of each year from 2051 to 2053. With an applicable discount rate of 10%, the lease amortization schedule is as follows:

Beg. balance

(a)

Lease payment

(b)

Interest expense

(c)

Lease amortized

(d = b c)

Ending balance

(a - d)

1

100,000.00

40,211.48

10,000.00

30,211.48

69,788.52

2

69,788.52

40,211.48

6,978.85

33,232.63

36,555.89

3

36,555.89

40,211.48

3,655.59

36,555.89

0

Using the template below, provide the relevant accounting entries on Jan. 1, 2051, and Dec. 31, 2051, respectively, showing the dollar amounts and whether they are an increase or decrease.

Answer:

Jan. 1, 2051, Lease agreed.

Assets

Liabilities & Equity

Dec. 31, 2051, Lease payment.

Assets

Liabilities & Equity

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

Green And Sustainable Finance

Authors: Simon Thompson

2nd Edition

1398609242, 978-1398609242

More Books

Students also viewed these Finance questions