View Policies Show Attempt History Current Attempt in Progress Shamrock Dairy leases its milking equipment from Bridgeport Finance Company under the following lease terms. 1. The lease term is 10 years, noncancelable, and requires equal rental payments of $29,300 due at the beginning of each year starting January 1, 2020. 2. The equipment has a fair value at the commencement of the lease (January 1, 2020) of $220,857 and a cost of $239,000 on Bridgeport Finance's books. It also has an estimated economic life of 15 years and an expected residual value of $13,100, though Shamrock Dairy has guaranteed a residual value of $18.400 to Bridgeport Finance. 3. The lease contains no renewal options, and the equipment reverts to Bridgeport Finance upon termination of the lease. The equipment is not of a specialized use. 4. Shamrock Dairy's incremental borrowing rate is 8% per year. The implicit rate is also 8%. 5. Shamrock Dairy depreciates similar equipment that it owns on a straight-line basis. 6. Collectibility of the payments is probable. Click here to view factor tables. Prepare the journal entries for the lessee and lessor at January 1, 2020, and December 31, 2020 (the lessee's and lessor's year- end), Assume no reversing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25125 and final answers to 0 decimal places, e.g. 5,250.) Date Account Titles and Explanation Debit Credit Lessee Jan. 1.2020 . Leased Equipment 220857 Lease Liability 220 (To record the lease.) an. 1, 2020 Lease Liability 29300 Cash (To record lease payment.) Lessor: Lessor: Jan 1, 2020 Lease Receivable 220857 Equipment Cash Lease Receivable (To record the lease.) an. 1, 2020 cas 29300 Lease Receivable (To record lease payment.) Lessee: Dec 31, 2020 int 15325 Interest Payable (To record interest.) Dec 31, 2020 Depreciation Expense 20246 Accumulated Depreciation-Equipment (To record amortization.) Lessor: Lessee: Dec 31, 2020 15325 Interest Payable (To record interest.) Dec 31, 2020 + Depreciation Expense 20246 Accumulated Depreciatian-Equipment (To record amortization.) Lessor: Dec. 31, 2020 Interest Receivable 15325 Interest Revenue e Textbook and Media List of Accounts X Your answer is incorrect. What would have been the amount of the initial lease liability recorded by the lessee upon the commencement of the lease if: (Round answers to O decimal places, e... 5.250.) 11 The residual value of $18.400 had been guaranteed by a third party, not the lessee? View Policies Show Attempt History Current Attempt in Progress Shamrock Dairy leases its milking equipment from Bridgeport Finance Company under the following lease terms. 1. The lease term is 10 years, noncancelable, and requires equal rental payments of $29,300 due at the beginning of each year starting January 1, 2020. 2. The equipment has a fair value at the commencement of the lease (January 1, 2020) of $220,857 and a cost of $239,000 on Bridgeport Finance's books. It also has an estimated economic life of 15 years and an expected residual value of $13,100, though Shamrock Dairy has guaranteed a residual value of $18.400 to Bridgeport Finance. 3. The lease contains no renewal options, and the equipment reverts to Bridgeport Finance upon termination of the lease. The equipment is not of a specialized use. 4. Shamrock Dairy's incremental borrowing rate is 8% per year. The implicit rate is also 8%. 5. Shamrock Dairy depreciates similar equipment that it owns on a straight-line basis. 6. Collectibility of the payments is probable. Click here to view factor tables. Prepare the journal entries for the lessee and lessor at January 1, 2020, and December 31, 2020 (the lessee's and lessor's year- end), Assume no reversing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25125 and final answers to 0 decimal places, e.g. 5,250.) Date Account Titles and Explanation Debit Credit Lessee Jan. 1.2020 . Leased Equipment 220857 Lease Liability 220 (To record the lease.) an. 1, 2020 Lease Liability 29300 Cash (To record lease payment.) Lessor: Lessor: Jan 1, 2020 Lease Receivable 220857 Equipment Cash Lease Receivable (To record the lease.) an. 1, 2020 cas 29300 Lease Receivable (To record lease payment.) Lessee: Dec 31, 2020 int 15325 Interest Payable (To record interest.) Dec 31, 2020 Depreciation Expense 20246 Accumulated Depreciation-Equipment (To record amortization.) Lessor: Lessee: Dec 31, 2020 15325 Interest Payable (To record interest.) Dec 31, 2020 + Depreciation Expense 20246 Accumulated Depreciatian-Equipment (To record amortization.) Lessor: Dec. 31, 2020 Interest Receivable 15325 Interest Revenue e Textbook and Media List of Accounts X Your answer is incorrect. What would have been the amount of the initial lease liability recorded by the lessee upon the commencement of the lease if: (Round answers to O decimal places, e... 5.250.) 11 The residual value of $18.400 had been guaranteed by a third party, not the lessee