Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Recording Sales-Type Lease, Unguaranteed Residual Value--Lessor Flint Company leased equipment to Land Company for a five-year period. Flint paid $18,786 for the equipment, its current

image text in transcribedimage text in transcribed

Recording Sales-Type Lease, Unguaranteed Residual Value--Lessor Flint Company leased equipment to Land Company for a five-year period. Flint paid $18,786 for the equipment, its current carrying value (estimated useful life five years). The lease started on January 1, 2020. Flint uses a target rate of return of 8% in all lease contracts. The first payment was on January 1, 2020, and the accounting periods end on December 31. The equipment reverts to the lessor at the end of the lease term at which time the lessor estimates that the equipment will have an unguaranteed residual value of $800. Required a. Compute the annual payment for the lessor. Note: Round answer to the nearest dollar. Note: Do not use a negative sign with your answer. Support Amortization Schedule Journal Entries b. Prepare an amortization schedule of the lease receivable for the lessor Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. . Note: Include any net rounding difference to Lease Receivable in the Interest Revenue amount for Jan. 1, 2025. Lease Interest Reduction of Lease Date Payment Revenue Lease Receivable Receivable Jan 1, 2020 Jan. 1. 2020 $ 0 $ 0 $ 0 Jan. 1.2021 Jan. 1, 2022 Jan 1, 2023 Jan 1, 2024 jan. 1, 2025 Total $ 0 $ 0 Check Note: Do not use a negative sign with your answer. Amortization Schedule Journal Entries c. Provide journal entries for 2020 and 2021 for the lessor assuming that the equipment is held in the lessor's Inventory account. Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Cr. Jan. 1, 2020 Support To record lease receivable Jan 1, 2020 To record lease payment Dec. 31, 2020 To record interest Jan 1, 2021 To record lease payment Dec 31, 2021 To record interest d. Record the entry on January 1, 2025, for the return of the equipment assuming the equipment had a fair value of $800. Date Account Name Dr. Cr. Jan. 1, 2025

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Principles

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Steinbart Romney B.

9th International Edition

0470409460, 978-0470409466

More Books

Students also viewed these Accounting questions