Answered step by step
Verified Expert Solution
Question
1 Approved Answer
PART II Prepare Elsee's joumal entries to properly record its lease activity. Transaction 1. Entering into the lease on 1/2/Year 4. 2. Making the lease
PART II Prepare Elsee's joumal entries to properly record its lease activity. Transaction 1. Entering into the lease on 1/2/Year 4. 2. Making the lease payment on 12/31/Year 4. 3. Other expenses, if any, related to the lease for the year ended 12/31/Year 4. Account Name Debit Credit 123 123 123 123 123 123 123 123 123 123 123 123 123 123 Grant Inc. Leasing Agreement Grant Inc. Leasing Agreement Date: January 2, Year 4 Lessor: Grant Inc. Lessee: Elsee Co. Equipment: Bottling machine Summary of lease terms: Payment $100,000 amount: Lease term: 20 year Payment due December 31 date: 13 Other lease information: 1. Title to the equipment passes to lessee at the end of the lease term. Present Value Table Present value of an annuity, payable at the end of each period for n periods Periods Interest rate (r) (n) 8% 9% 10% 11% 12% 13% 14% 15 8.6 8.1 7.6 7.2 6.8 6.5 6.1 16 8.9 8.3 7.8 7.4 7.0 6.6 6.3 17 9.1 8.5 8.0 7.5 7.1 6.7 6.4 18 9.4 8.8 8.2 7.7 7.2 6.8 6.5 19 9.6 9.0 8.4 7.8 7.4 6.9 6.6 20 9.8 9.1 8.5 8.0 7.5 7.0 6.6 2222 21 10.0 9.3 8.6 8.1 7.6 7.1 6.7 10.2 9.4 8.8 8.2 7.6 7.2 6.7 23 10.4 9.6 8.9 8.3 7.7 7.2 6.8 24 10.5 9.7 9.0 8.3 7.8 7.3 6.8 25 10 7 98 91 84 78 73 69 Memo from CFO to Acct. Dept. Memo from CFO to Accounting Department Memorandum Date: January 2, Year 4 To: Accounting Department, Elsee Co. From: CFO, Elsee Co. RE: Lease of bottling machine from Grant Inc. Please note the following when recording this lease: The interest rate implicit in the lease is 10%, although Elsee's incremental borrowing rate is The estimated life of the bottling machine is 25 years. This lease should be recorded using straight-line depreciation
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