Question
Problem for December 31st, 2021: The Works Leased a delivery truck to YA right after purchasing it for $40,000 on December 31st, 2021. Its retail
Problem for December 31st, 2021: The Works Leased a delivery truck to YA right after purchasing it for $40,000 on December 31st, 2021. Its retail value is $45,114.
The lease agreement specifies annual payments of $11,000, including $1,000 maintenance fee, beginning December 31st, and at each December 31 through 2024. The interest rate for determining payments was 10%. At the end of the four-year lease term (December 31, 2025), the truck was expected to be worth $15,000.
The useful life of the truck is five years with no salvage value. The company uses straight-line method. In addition, the guaranteed residual value was $6,000. What are the journal entries to record for these transactions?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started