The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee.

Commencement dateMay 1, 2020

Annual lease payment due at the beginning of

each year, beginning with May 1, 2020$20,471.94

Bargain purchase option price at end of lease term$4,000

Lease term5years

Economic life of leased equipment10years

Lessors cost$65,000

Fair value of asset at May 1, 2020$91,000

Lessors implicit rate8%

Lessees incremental borrowing rate8%

The collectibility of the lease payments by Mooney is probable. Click here to view factor tables.

(a)

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Compute the amount of the lease receivable at commencement of the lease. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round answer to 2 decimal places, e.g. 5,275.15.) Lease receivable at commencement

$

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(b)

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Prepare a lease amortization schedule for Mooney for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.)

MOONEY LEASING COMPANY (Lessor) Lease Amortization Schedule

Date

Annual Lease Payment Plus BPO

Interest on Lease Receivable

Recovery of Lease Receivable

Lease Receivable

5/1/20

$

$

$

$

5/1/20

5/1/21

5/1/22

5/1/23

5/1/24

4/30/25

$

$

$

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(c)

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Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2020 and 2021. The lessors accounting period ends on December 31. Reversing entries are not used by Mooney. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.)

Date

Account Titles and Explanation

Debit

Credit

5/1/2012/31/205/1/2112/31/21

(To record the lease)

5/1/2012/31/205/1/2112/31/21

(To record lease payment)

5/1/2012/31/205/1/2112/31/21

5/1/2012/31/205/1/2112/31/21

5/1/2012/31/205/1/2112/31/21

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(d)

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Your answer is partially correct.

Suppose the collectibility of the lease payments was not probable for Mooney. Prepare all necessary journal entries for the company in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15.)

Date

Account Titles and Explanation

Debit

Credit

5/1/20

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The following facts pertain to a non-cancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Commencement date May 1, 2020 Annual lease payment due at the beginning of each year, beginning with May 1, 2020 $20,471.94 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, 2020 $91,000 Lessors implicit rate 8 % Lessees incremental borrowing rate 8 % The collectibility of the lease payments by Mooney is probable. Click here to view factor tables. (a) Correct answer icon Your answer is correct. Compute the amount of the lease receivable at commencement of the lease. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round answer to 2 decimal places, e.g. 5,275.15.) Lease receivable at commencement $ 90999.99 eTextbook and Media List of Accounts Attempts: 1 of 3 used (b) Correct answer icon Your answer is correct. Prepare a lease amortization schedule for Mooney for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) MOONEY LEASING COMPANY (Lessor) Lease Amortization Schedule Date Annual Lease Payment Plus BPO Interest on Lease Receivable Recovery of Lease Receivable Lease Receivable 5/1/20 $ $ $ $ 91000 5/1/20 20471.94 20471.94 70528.06 5/1/21 20471.94 5642.24 14829.70 55698.36 5/1/22 20471.94 4455.87 16016.07 39682.29 5/1/23 20471.94 3174.58 17297.36 22384.94 5/1/24 20471.94 1790.8 18681.14 3703.79 4/30/25 4000 296.30 3703.8 0 $ 106359.70 $ 15359.8 $ 91000 eTextbook and Media List of Accounts Attempts: 2 of 3 used (c) Partially correct answer icon Your answer is partially correct. Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2020 and 2021. The lessors accounting period ends on December 31. Reversing entries are not used by Mooney. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit 5/1/20 Right-of-Use Asset 91000 Lease Liability 91000 Lease Liability 20471.94 Cash 20571.94 (To record the lease) 12/31/20 Interest Expense 3761.49 Lease Liability 3761.49 (To record lease payment) 5/1/21 Amortization Expense 6066.67 Right-of-Use Asset 6066.67 5/1/21 Interest Expense 5642.24 Lease Liability 14829.70 Cash 20471.94 12/31/21 Interest Expense 2970.58 Lease Liability 2970.58 eTextbook and Media List of Accounts Attempts: 1 of 3 used (d) Partially correct answer icon Your answer is partially correct. Suppose the collectibility of the lease payments was not probable for Mooney. Prepare all necessary journal entries for the company in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15.) Date Account Titles and Explanation Debit Credit 5/1/20 Lease Liability 20471.94 Cash 20471.94 eTextbook and Media List of Accounts Attempts: 2 of 3 used