Question
The following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Inception date: May 1, 2014 Annual lease
The following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Inception date: May 1, 2014 Annual lease payment due at the beginning of each year, beginning with May 1, 2014 $21,227.60 Bargain-purchase option price at end of lease term $4,000 Lease term 5 years Economic life of leased equipment 10 years Lessors cost $65,000 Fair value of asset at May 1, 2014 $91,000 Lessors implicit rate 10 % Lessees incremental borrowing rate 10 % The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs. 
Prepare the journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2014 and 2015. Rodes annual accounting period ends on December 31. Reversing entries are used by Rode. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and Round answers to 2 decimal places, e.g. 15.25.)
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Management Accounting And Strategic Human Resource Management
Authors: John Innes, Reza Kouhy
1st Edition
1859714862, 978-1859714867
