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Wildhorse Corp. is a manufacturer of truck trailers. On January 1, 2021, Wildhorse Corp. leases 9 trailers to Blossom Company under a 5-year noncancelable lease
Wildhorse Corp. is a manufacturer of truck trailers. On January 1, 2021, Wildhorse Corp. leases 9 trailers to Blossom Company under a 5-year noncancelable lease agreement. The following information about the lease and the trailers is provided:
1. | Equal annual payments that are due on January 1 each year provide Wildhorse Corp. with an 12% return on net investment. | |
2. | Titles to the trailers pass to Blossom at the end of the lease. | |
3. | The fair value of each trailer is $50,600. The cost of each trailer to Wildhorse Corp. is $45,800. Each trailer has an expected useful life of nine years. | |
4. | Collectibility of the lease payments is probable. |
Please check my answers and help me with the last journal entries, thank you!
What type of lease is this for the lessor? Direct-financing type lease Calculate the annual lease payment. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.) Annual lease payment $ 112796 Prepare a lease amortization schedule for Wildhorse Corp. for the first three years. (Round answers to 0 decimal places e.g. 5,275.) Wildhorse Corp. Lease Amortization Schedule (Lessor) Interest on Lease Lease Receivable Receivable Recovery Lease Receivable Date Annual Lease Rental 1/1/21 $ 4,55,400 1/1/21 $ 1,12,796 $ $ 1,12,796 3,42,604 1/1/22 1,12,796 41,112 71,684 2,70.920 1/1/23 1,12,796 32,510 80,286 1,90,635 Prepare the journal entries for the lessor for 2021 to record the lease agreement, the receipt of the lease rentals, and the recognition of revenue. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit January 1, 2021 (To record the lease) January 1, 2021 (To record receipt of the first lease payments) December 31, 2021
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