Question
On January 1, 2024, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 2% of
On January 1, 2024, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 2% of Taco Kings sales revenue, with a quarterly sales minimum of $450,000. Payments at the beginning of each quarter are based on previous quarter sales. During the previous five-year period, Taco King has generated quarterly sales of over $675,000. Fogelmans interest rate, known by Taco King, was 8%.
Note: Use Excel, or a financial calculator.
Required:
- Prepare the journal entries for Taco King at the beginning of the lease on January 1, 2024.
- Prepare the journal entries for Taco King on April 1, 2024. First quarter sales were $685,000. Amortization is recorded quarterly.
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Accounting Tools for business decision making
Authors: kimmel, weygandt, kieso
4th Edition
978-0470117262, 9780470534786, 470117265, 470534788, 978-0470095461
