Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On January 1, 2020, Pronghorn Animation sold a truck to Peete Finance for $35,000 and immediately leased it back. The truck was carried on Pronghorn's
On January 1, 2020, Pronghorn Animation sold a truck to Peete Finance for $35,000 and immediately leased it back. The truck was carried on Pronghorn's books at $31,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Pronghorn at lease-end. The lease requires 5 equal rental payments of $8,536 at the end of each year (first payment on January 1, 2021). The appropriate rate of interest is 7%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Pronghorn's 2020 journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit 1/1/20 Cash 35000 Notes Payable 35000 12/31/20 Notes Payable 8536 Cash 8536
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started