Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sportscraft Company is a manufacturer of specialty sports vehicles, which it sells or leases through online platforms. On 1/1/21, Sportscraft leased twelve electric golf carts

image text in transcribed Sportscraft Company is a manufacturer of specialty sports vehicles, which it sells or leases through online platforms. On 1/1/21, Sportscraft leased twelve electric golf carts to Evergreen Golf Club. Data relating to the lease follow: Cost of equipment to Sportscraft ($4,800 each) Useful life of equipment Fair market value of the golf carts at 1/1/21 ($7,200 each) $57,600 $86,400 5 years Lease term 3 years (guaranteed by Evergreen Golf Club) $12,000 $9,000 6% Residual value of the twelve carts at the end of the lease Residual value expected by Evergreen Golf Club Implicit and incremental interest rates Initial direct costs incurred by Evergreen Golf Club in negotiation $6,000 Both the lessor and lessee use straight-line depreciation and have accounting periods that end on 12/31. Required: a. Calculate the yearly payment that Sportscraft will charge Evergreen Golf Club under this lease agreement if payments are made on 1/1 of each year, beginning 1/1/21. b. C. d. Prepare all journal entries that would be made by Sportscraft (lessor) during 2021 and 2022 relating to this lease. Prepare all journal entries that would be made by Evergreen Golf Club (lessee) during 2021 and 2022 relating to this lease. Prepare the journal entries made by both Sportscraft and Evergreen Golf Club with respect to the lease termination if the actual residual value of the twelve golf carts is $8,500

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

Step: 3

blur-text-image

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

Intermediate Accounting

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy

11th Canadian edition Volume 2

1119048540, 978-1119048541

More Books

Students also viewed these Accounting questions