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Question 20 The following facts pertain to a non-cancelable lease agreement between Teal Mountain Leasing Company and Sandhill Company, a lessee. May 1, 2020 Commencement
Question 20
The following facts pertain to a non-cancelable lease agreement between Teal Mountain Leasing Company and Sandhill Company, a lessee. May 1, 2020 Commencement date Annual lease payment due at the beginning of each year, beginning with May 1, 2020 Bargain purchase option price at end of lease term $15,349.90 $6,000 5 years Lease term Economic life of leased equipment Lessor's cost 10 years $65,000 $76,000 Fair value of asset at May 1, 2020 Lessor's implicit rate Lessee's incremental borrowing rate 4 % 4 % The collectibility of the lease payments by Teal Mountain is probable. Click here to view factor tables. * Your answer is incorrect. Compute the amount of the lease receivable at commencement of the lease. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round answer to 2 decimal places, e.g. 5,275.15.) Lease receivable at commencement $ Prepare a lease amortization schedule for Teal Mountain for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) TEAL MOUNTAIN LEASING COMPANY (Lessor) Lease Amortization Schedule Interest on Lease Recovery of Lease Receivable Receivable Lease Payment Plus BPO Lease Receivable TA $ $ 76006 15350 15350 60656 15350 2426 12923.90 47726.21 15350 1909.05 13440.85 34285.3! 15350 1371.41 13978.49 20306.87 15350 812.27 14537.63 5769.24 6000 230.77 5769.23 .01 82750 $ UAH 6750 $ TA 76000 Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2020 and 2021. The lessor's accounting period ends on December 31. Reversing entries are not used by Teal Mountain. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, eg. 5,275.15. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease) (To record lease payment) NIDIN! NON * Your answer is incorrect. Suppose the collectibility of the lease payments was not probable for Teal Mountain. Prepare all necessary journal entries for the company in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15.) Date Account Titles and Explanation Debit Credit 5/1/20 TI
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