Answered step by step
Verified Expert Solution
Question
1 Approved Answer
P21-9 (LO2,4) GROUPWORK (Lessor Computations and Entries, Sales-Type Lease with Unguaranteed Residual Value) George Company manufactures a check-in kiosk with an estimated economic life of
P21-9 (LO2,4) GROUPWORK (Lessor Computations and Entries, Sales-Type Lease with Unguaranteed Residual Value) George Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases it to National Airlines for a period of 10 years. The normal selling price of the equipment is $299,140, and its unguaranteed residual value at the end of the lease term is estimated to be $20,000. National will pay annual payments of $40,000 at the beginning of each year. George incurred costs of $180,000 in manufacturing the equipment and $4,000 in sales commissions in closing the lease. George has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 8% Instructions (a) Discuss the nature of this lease in relation to the lessor and compute the amount of each of the following items. (1) (2) (3) Lease receivable. Sales price. Cost of goods sold. (b) Prepare a 10-year lease amortization schedule for George, the lessor. (c) Prepare all of the lessor's journal entries for the first year
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