Padroan company reases a Dunong Lu Waisn, Inc. On January 1, 2020. me Tonowiny idcis per al cu me ledse agreement. 2. 1. The lease term is 5 years, with equal annual rental payments of $4,048 at the beginning of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $19,600, a book value to Pharoah of $12,600, and a useful life of 6 years. 4. At the end of the lease term, Pharoah and Walsh expect there to be an unguaranteed residual value of $3,150. 5. Pharoah wants to earn a return of 8% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. Click here to view factor tables. Using the original facts of the lease, show the journal entries to be made by both Pharoah and Walsh in 2020. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to o decimal places, e.g. 5,275. Credit account tities are automatically indented when the amount is entered. Do not indent manually.) Pharoah Journal Entries Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) Walsh's Journal Entries Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) (To record interest expense) . Padroan company reases a Dunong Lu Waisn, Inc. On January 1, 2020. me Tonowiny idcis per al cu me ledse agreement. 2. 1. The lease term is 5 years, with equal annual rental payments of $4,048 at the beginning of each year. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $19,600, a book value to Pharoah of $12,600, and a useful life of 6 years. 4. At the end of the lease term, Pharoah and Walsh expect there to be an unguaranteed residual value of $3,150. 5. Pharoah wants to earn a return of 8% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. Click here to view factor tables. Using the original facts of the lease, show the journal entries to be made by both Pharoah and Walsh in 2020. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to o decimal places, e.g. 5,275. Credit account tities are automatically indented when the amount is entered. Do not indent manually.) Pharoah Journal Entries Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) Walsh's Journal Entries Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) (To record interest expense)
