View Policies Show Attempt History Current Attempt in Progress 1. 2. Lewis Corporation entered into a lease agreement on January 1, 2020, to provide Dawkins Company with a piece of machinery. The terms of the lease agreement were as follows. The lease is to be for 3 years with rental payments of $10,521 to be made at the beginning of each year. The machinery has a fair value of $55.000, a book value of $40,000, and an economic life of 8 years. At the end of the lease term, both parties expect the machinery to have a residual value of $30,000, none of which is guaranteed The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset is not of a specialized nature. The implicit rate is 6%, which is known by Dawkins Collectibility of the payments is probable, 3. 4. 5. 6. Click here to view factor tables DAWKINS COMPANY Lease Amortization Schedule Annuity-Due Basis Interest Reduction of on Liability Lease Liability ite Annual Payment Lease Liability /20 /20 $ 10521 $ 0 $ 10521 /21 10521 /22 10521 Lease Expense Schedule (A) C) Amortization of Right-of-Use Asset (and Liability (A-B) (8) Interest on Lease Liability Straight-Line Expense Car Righ Date $ 1/20 S $ 2/31/20 2/31/21 2/31/22 Prepare the 2020 journal entries for Dawkins. (Credit account titles are automatically Indented when the amount is entered. Do not Indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to decimal places eg. 58,971.) Date Debit Credit Account Titles and Explanation Lease Expense Jan. 1 (To record lease) Jan. 1 Cash (To record first lease payment) LLA Dec. 31 Depreciation Expense Machinery (To record lease expense and amortization) X Your answer is incorrect. Prepare the 2020 journal entries for Lewis. (Credit account titles are automatically Indented when the amount is entered. Do not Indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to decimal places es. 58,971) Account Titles and Explanation Credit Date Debit Jan. 1 (To record lease payments) Dec. 31 (To record lease revenue) Dec. 31 (To record depreciation) Suppose the lease were only for one year instead of 3 years, with just one lease payment at the beginning of the lease term Prepare any journal entries Dawkins would need, assuming it elects to use the short-term lease option. (Credit account titles are automatically Indented when the amount is entered. Do not Indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round present value foctor calculations to 5 decimal places, eg. 1.25124 and the final answer to 0 decimal places eg. 58,971.) Date Account Titles and Explanation Debit Credit Jan, 1 e Textbook and Media List of Accounts
