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Problem 21-13 (Part Level Submission) The following facts pertain to a non-cancelable lease agreement between Alschuler Leasing Company and Sheridan Electronics, a lessee, for a
Problem 21-13 (Part Level Submission) The following facts pertain to a non-cancelable lease agreement between Alschuler Leasing Company and Sheridan Electronics, a lessee, for a computer system. Commencement date Lease term Economic life of leased equipment Fair value of asset at October 1, 2020 Book value of asset at October 1, 2020 Residual value at end of lease term Lessor's implicit rate Lessee's incremental borrowing rate Annual lease payment due at the beginning of each year, beginning with October 1, 2020 October 1, 2020 6 years 6 years $280,740 $280,000 -0- 10 % 10 % $58,600 The collectibility of the lease payments is probable by the lessor. The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment. The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a finance lease by the lessee and as a sales-type lease by the lessor. Lease Payment/Receipt Date 10/01/20 10/01/20 10/01/21 10/01/22 10/01/23 10/01/24 10/01/25 $58,600 58,600 58,600 58,600 58,600 58,600 $351,600 Interest (10%) on Unpaid Reduction of Lease Balance of Lease Liability/Receivable Liability/Receivable Liability/Receivable $280,740 $58,600 222,140 $22,214 36,386 185,754 18,575 40,025 145,729 14,573 44,027 101,702 10,170 48,430 53,272 5,328 53,272 -0- $70,860 $280,740 (a) Assuming the lessee's accounting period ends on September 30, answer the following questions with respect to this lease agreement. (Round answers to 0 decimal places e.g. 58,971.) (1) What items and amounts will appear on the lessee's income statement for the year ending September 30, 2021? (2) What items and amounts will appear on the lessee's balance sheet at September 30, 2021? Balance Sheet (Partial) Current Liabilities: Long-term Liabilities: Non-current Assets: ta (3) What items and amounts will appear on the lessee's income statement for the year ending September 30, 2022? (4) What items and amounts will appear on the lessee's balance sheet at September 30, 2022? Balance Sheet (Partial) Current Liabilities: Long-term Liabilities: Non-current Assets
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