the tax rate is 404 nome before income taxe to preparing the income able income for Advanced Accounting II Chapter 21 - Leases Problem 1. On January 1, 2019, Wilcox Inc. leased equipment from Zed Co. for use in th The noncancelable lease is for 6 years with an unguaranteed residual value of $5,000 and leased equipment from Zed Co. for use in the engineering department life of the leased equipment is 10 years. The lease does not contain automatic title transic aranteed residual value of $5,000 and the estimated economic option. Lease payments are $9.000 per year. navable each December 31. The incremental borrowing rave not contain automatic title transfer or a bargain purchase 18 8 percent and Zed's implicit interest rate (known by Wilcox) is 6 percent. Wilcox uses stran. for the equipment. To Zed, the equipment had a cost of $44.000 and fair value of $48,000. The conca lease payments is probable for the lessor. Instructions Provide the necessary journal entries to record the transactions for the lessee and lessor for the period January 2019 through December 31, 2020. Problem 2. Jason Inc, uses lenses as a means of selling its equinment. On January 1, 2019. Jason casco a na to Jeremy Manufacturing. The cost of the machine to Jason was $26,000. The fair market value (which was the manca price) was $29.991 at the time of the noncancelable lease. Jason expects to receive the full fair value of the equipment at 8% through the lease. Annual lease payments are payable each December 31 for 5 years, the machine's economic life is 8 years. The expected residual value of $3,000 is guaranteed by the lessee. The collectability of the lease payments is probable for the lessor. Instructions 1. Compute the annual lease payment. 2. Provide the necessary journal entries to record the transactions for the lessee and lessor for the period January 1, 2019 through December 31, 2020. 3. Compute lessor's sales profit in the first year of the lease. Problem 3. Watt Financing leased a packing machine to Nuts Company. The noncancelable lease requires lease navments of $50,000 per year, payable in advance, over a five-year period. There is a bargain purchase option of interest rate (known to Nuts) is 11 percent. The lease term begins on January Ann The collectability of the lease payment Urnal entries required on both Watt 's and Nuts' books to record the lease transaction through December 31, 2020. Problem 4. On January 1, 2019. Erk, the lessee, and Betty, the lessor, signed a noncancelable lease agreement for Betty's equipment with a carrying amount of $75,000. The lease term is seven years with rental payments of $10,000 at the beginning of each year. Erk's incremental borrowing rate is 9%. The equipment is expected to have a residual value of $15,000 at the end of the lease, unguaranteed, and a useful life of 15 years. The collectability of the lease payments is probable for the lessor Betty. Instructions a. Determine the present value of the lease payments. b. Classify the lease from the standpoint of the lessee and lessor, giving reasons. c. Prepare the journal entries of the lessee through December 31, 2020. d. Prepare the journal entries of the lessor through December 31, 2020. Problem 5. Everything remains the same as Problem 4 except that the residual value of $15,000 at the end of the lease is guaranteed. Instructions a. Determine the present value of the lease payments. b. Classify the lease from the standpoint of the lessee and lessor, giving reasons. c. Prepare the journal entries of the lessee through December 31, 2020. d. Prepare the journal entries of the lessor through December 31, 2020. K21-1 U UT Problem 3. Watt Financing leased a packing machine to Nuts Company. The noncancelable lease requires payments of $50,000 per year, payable in advance, over a five-year period. There is a bargain purchase opti $20,000 for Nuts. Watt's implicit interest rate (known to Nuts) is 11 percent. The lease term begins on Janu: 2019. The machine's economic life is 10 years with a cost of $200,000. The collectability of the lease payme probable for the lessor. Instructions Provide the journal entries required on both Watt 's and Nuts' books to record the lease transaction through December 31, 2020. the tax rate is 404 nome before income taxe to preparing the income able income for Advanced Accounting II Chapter 21 - Leases Problem 1. On January 1, 2019, Wilcox Inc. leased equipment from Zed Co. for use in th The noncancelable lease is for 6 years with an unguaranteed residual value of $5,000 and leased equipment from Zed Co. for use in the engineering department life of the leased equipment is 10 years. The lease does not contain automatic title transic aranteed residual value of $5,000 and the estimated economic option. Lease payments are $9.000 per year. navable each December 31. The incremental borrowing rave not contain automatic title transfer or a bargain purchase 18 8 percent and Zed's implicit interest rate (known by Wilcox) is 6 percent. Wilcox uses stran. for the equipment. To Zed, the equipment had a cost of $44.000 and fair value of $48,000. The conca lease payments is probable for the lessor. Instructions Provide the necessary journal entries to record the transactions for the lessee and lessor for the period January 2019 through December 31, 2020. Problem 2. Jason Inc, uses lenses as a means of selling its equinment. On January 1, 2019. Jason casco a na to Jeremy Manufacturing. The cost of the machine to Jason was $26,000. The fair market value (which was the manca price) was $29.991 at the time of the noncancelable lease. Jason expects to receive the full fair value of the equipment at 8% through the lease. Annual lease payments are payable each December 31 for 5 years, the machine's economic life is 8 years. The expected residual value of $3,000 is guaranteed by the lessee. The collectability of the lease payments is probable for the lessor. Instructions 1. Compute the annual lease payment. 2. Provide the necessary journal entries to record the transactions for the lessee and lessor for the period January 1, 2019 through December 31, 2020. 3. Compute lessor's sales profit in the first year of the lease. Problem 3. Watt Financing leased a packing machine to Nuts Company. The noncancelable lease requires lease navments of $50,000 per year, payable in advance, over a five-year period. There is a bargain purchase option of interest rate (known to Nuts) is 11 percent. The lease term begins on January Ann The collectability of the lease payment Urnal entries required on both Watt 's and Nuts' books to record the lease transaction through December 31, 2020. Problem 4. On January 1, 2019. Erk, the lessee, and Betty, the lessor, signed a noncancelable lease agreement for Betty's equipment with a carrying amount of $75,000. The lease term is seven years with rental payments of $10,000 at the beginning of each year. Erk's incremental borrowing rate is 9%. The equipment is expected to have a residual value of $15,000 at the end of the lease, unguaranteed, and a useful life of 15 years. The collectability of the lease payments is probable for the lessor Betty. Instructions a. Determine the present value of the lease payments. b. Classify the lease from the standpoint of the lessee and lessor, giving reasons. c. Prepare the journal entries of the lessee through December 31, 2020. d. Prepare the journal entries of the lessor through December 31, 2020. Problem 5. Everything remains the same as Problem 4 except that the residual value of $15,000 at the end of the lease is guaranteed. Instructions a. Determine the present value of the lease payments. b. Classify the lease from the standpoint of the lessee and lessor, giving reasons. c. Prepare the journal entries of the lessee through December 31, 2020. d. Prepare the journal entries of the lessor through December 31, 2020. K21-1 U UT Problem 3. Watt Financing leased a packing machine to Nuts Company. The noncancelable lease requires payments of $50,000 per year, payable in advance, over a five-year period. There is a bargain purchase opti $20,000 for Nuts. Watt's implicit interest rate (known to Nuts) is 11 percent. The lease term begins on Janu: 2019. The machine's economic life is 10 years with a cost of $200,000. The collectability of the lease payme probable for the lessor. Instructions Provide the journal entries required on both Watt 's and Nuts' books to record the lease transaction through December 31, 2020