Question
Rexon Company leases equipment to Ten-Care Company beginning January 1, 2016. The lease terms, provisions, and related events are as follows: 1. The lease term
Rexon Company leases equipment to Ten-Care Company beginning January 1, 2016. The lease terms, provisions, and related events are as follows:
1. | The lease term is 8 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. |
2. | The cost, and also fair value, of the equipment is $500,000. The equipment has an estimated life of 8 years and has a zero estimated value at the end of that time. |
3. | Ten-Care agrees to pay all executory costs. |
4. | The lease contains no renewal or bargain purchase option. |
5. | The interest rate implicit in the lease is 14%. |
6. | The initial direct costs are insignificant and assumed to be zero. |
7. | The collectibility of the rentals is reasonably assured, and there are no important uncertainties surrounding the amount of unreimbursable costs yet to be incurred by the lessor. |
Required:
1. | Next Level Assuming that the lease is a direct financing lease from Rexons point of view, calculate the amount of the equal rental receipts. |
2. | Prepare a table summarizing the lease receipts and interest revenue earned by Rexon. |
3. | Prepare journal entries for Rexon for the years 2016 and 2017.
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Assuming that the lease is a direct financing lease from Rexons point of view, calculate the amount of the equal rental receipts. Additional Instruction
Prepare a table summarizing the lease receipts and interest revenue earned by Rexon. Additional Instructions
Score: 9/84
REXON COMPANY |
Lease Payments Received and Interest Revenue Earned Summary |
2016 - 2023 |
1 | Date | Annual Lease Payment Received | Interest Revenue at 14% on Net Investment | Amount of Net Investment Recovered | Lease Receivable | Unearned Interest: Leases | Net Investment |
2 | January 1, 2016 |
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3 | December 31, 2016 | ||||||
4 | December 31, 2017 | ||||||
5 | December 31, 2018 | ||||||
6 | December 31, 2019 | ||||||
7 | December 31, 2020 | ||||||
8 | December 31, 2021 | ||||||
9 | December 31, 2022 | ||||||
10 | December 31, 2023 |
Prepare journal entries for Rexon for the years 2016 and 2017. Additional Instructions
All transactions on this page must be entered (except for post ref(s)) before you will receive Check My Work feedback.
PAGE 2016PAGE 2017
GENERAL JOURNAL
Score: 37/143
DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | |
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1 |
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2 |
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3 |
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4 |
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5 |
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6 |
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7 |
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Please help, I started doing some of it, but I know the answers are wrong. Thank you.
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