Please answer ALL parts of the question. It is ONE question with multiple parts. Anything that is filled in I am NOT sure if I put the correct answers. Thank you in advance!! I rate as soon as I receive an answer.
Crane Incorporated leases a piece of machinery to Blue Company on January 1, 2020, under the following terms. 1. The lease is to be for 4 years with rental payments of $10,814 to be made at the beginning of each year. 2. The machinery' has a fair value of $57,782, a book value of $43,120, and an economic life of 10 years. At the end of the lease term, both parties expect the machinery to have a residual value of $21,560. To protect against a large loss, Crane requests Blue to guarantee $14.920 of the 3. residual value, which Irving agrees to do. 4. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. 5. The implicit rate is 5%, which is known by Blue. 6. Collectibility of the payments is probable. Click here to view factor tables. Evaluate the criteria for classification of the lease, and describe the nature of the lease. For the lessee, it is a finance lease and for the lessor, it is a sales-type lease Prepare the journal entries for Blue for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places eg. 5,275.) Debit Credit Date Account Titles and Explanation Jan. 1 Right-of-Use Asset 57782 Lease Liability 57782 (To record lease) Jan. 1 lease libaility 10814 cash 10814 (To records first lease payment) Dec. 31 Interest Expense Interest Payable (To record accrued interest) Dec. 31 Amortization Expense Right-of-Use Asset (To record amortization expense) Suppose Blue did not guarantee any amount of the expected residual value. Prepare the journal entries for Blue for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To record first lease payment) Dec. 31 (To record interest and amortization) Suppose Blue did not guarantee any amount of the expected residual value. Prepare the journal entries for Crane for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease payments) Dec. 31 (To record lease revenue) Dec. 31 (To record depreciation)
