Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following facts pertain to a non-cancelable lease agreement between Kingbird Leasing Company and Blossom Company, a lessee. Commencement date May 1, 2020 Annual lease

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

Commencement date May 1, 2020
Annual lease payment due at the beginning of
each year, beginning with May 1, 2020 $17,865.02
Bargain purchase option price at end of lease term $7,000
Lease term 5 years
Economic life of leased equipment 10 years
Lessors cost $65,000
Fair value of asset at May 1, 2020 $85,000
Lessors implicit rate 6 %
Lessees incremental borrowing rate 6 %

The collectibility of the lease payments by Kingbird is probable.

Compute the amount of the lease receivable at commencement of the lease.

image text in transcribedimage text in transcribedimage text in transcribed

Prepare a lease amortization schedule for Kingbird for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.) KINGBIRD LEASING COMPANY (Lessor) Lease Amortization Schedule Interest on Lease Recovery of Lease Receivable Receivable Date Annual Lease Payment Plus BPO Lease Receivable 5/1/20 $ 5/1/20 5/1/21 5/1/22 5/1/23 5/1/24 4/30/25 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 lessor's accounting period ends on December 31. Reversing entries are not used by Kingbird. (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 (To record the lease) (To record lease payment) Suppose the collectibility of the lease payments was not probable for Kingbird. 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.) Debit Credit Date Account Titles and Explanation 5/1/20

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

Introductory Accounting Finance And Auditing For Lawyers

Authors: Lawrence Cunningham

6th Edition

0314280456, 978-0314280459

More Books

Students also viewed these Accounting questions

Question

Convert the hexadecimal number 7A01 to binary.

Answered: 1 week ago