Sheridan Incorporated leases a piece of machinery to Concord Company on January 1, 2020, under the following terms. 1. The lease is to be for 4 years with rental payments of $10.535 to be made at the beginning of each year. 2. The machinery' has a fair value of $56,388, a book value of $42,080, and an economic life of 10 years. At the end of the lease term, both parties expect the machinery to have a residual value of $21,040. To protect against a large loss, Sheridan requests Concord to guarantee $14,530 of the residual value, which Irving agrees to do. The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. 5. The implicit rate is 5%, which is known by Concord. 6. Collectibility of the payments is probable. Click here to view factor tables. Evaluate the criteria for classification of the lease, and describe the nature of the lease. For the lessee, it is a and for the lessor, it is a e Textbook and Media List of Accounts Prepare the journal entries for Concord for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry"for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 5,275.) Debit Credit Date Account Titles and Explanation Jan. 1 (To record lease) Jan. 1 (To records first lease payment) Dec 31 (To record accrued interest) Dec. 31 (To record amortization expense) eTextbook and Media Prepare the journal entries for Sheridan for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 (To record lease) Jan. 1 (To record first lease payment) Dec. 31 (To record lease revenue) eTextbook and Media List of Accounts Evaluate the criteria for classification of the lease, and describe the nature of the lease, assuming that Concord did not guarantee any amount of the expected residual value. For the lessee, it is a and for the lessor, it is a eTextbook and Media List of Accounts Suppose Concord did not guarantee any amount of the expected residual value. Prepare the journal entries for Concord for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places eg. 5,275.) Debit Credit Date Account Titles and Explanation Jan. 1 Right-of-Use Asset Lease Liability (To record lease) Suppose Concord did not guarantee any amount of the expected residual value. Prepare the journal entries for Concord for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places eg. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 Right-of-Use Asset Lease Liability (To record lease) Jan. 1 Lease Liability Cash (To record first lease payment) Dec. 31 Amortization Expense Right-of-Use Asset (To record interest and amortization) e Textbook and Media List of Accounts Suppose Concord did not guarantee any amount of the expected residual value. Prepare the journal entries for Sheridan for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 5,275.) Debit Credit Date Account Titles and Explanation Jan. 1 (To record lease payments) Dec. 31 (To record lease revenue) Dec. 31 (To record depreciation)
