Pharoah, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $40,000 from Sheridan Corporation. The agreement stipulates the following Rental payments of $8.799 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Pharoah must reimburse Sheridan each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $800, though these costs vary from year to year. Pharoah must make a payment of $500 with the rental payment each period to cover the insuran Sheridan has on the warehouse. Pharoah paid legal fees of $3,000 in executing the lease. Assuming Pharoah's incremental borrowing rate is 5% and the rate implicit in the lease is unknown, pre the journal entry to record the initial lease liability and right-of-use asset for Pharoah. (List all debit er before credit entries. 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 enter 0 for the amounts. For calculation purposes, use 5 decimal places as displayed in the fact table provided and round final answers to O decimal places, e.g. 5,275) Click here to view factor tables. sh unt Titles and Explanation ht-of-Use Asset we Liability Debit Credit
Pharoah, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair value of $40,000 from Sheridan Corporation. The agreement stipulates the following Rental payments of $8.799 are to be made at the start of each year of the 5-year lease. No residual value is expected at the end of the lease. Pharoah must reimburse Sheridan each year for any real estate taxes incurred for the year. Last year, the cost of real estate taxes was $800, though these costs vary from year to year. Pharoah must make a payment of $500 with the rental payment each period to cover the insuran Sheridan has on the warehouse. Pharoah paid legal fees of $3,000 in executing the lease. Assuming Pharoah's incremental borrowing rate is 5% and the rate implicit in the lease is unknown, pre the journal entry to record the initial lease liability and right-of-use asset for Pharoah. (List all debit er before credit entries. 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 enter 0 for the amounts. For calculation purposes, use 5 decimal places as displayed in the fact table provided and round final answers to O decimal places, e.g. 5,275) Click here to view factor tables. sh unt Titles and Explanation ht-of-Use Asset we Liability Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...
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Transcribed Image Text:Pharoah, Inc. has entered an agreement to lease an old warehouse with a useful life of 5 years and a fair
value of $40,000 from Sheridan Corporation. The agreement stipulates the following
.
Rental payments of $8.799 are to be made at the start of each year of the 5-year lease. No residual
value is expected at the end of the lease.
Pharoahy must reimburse Sheridan each year for any real estate taxes incurred for the year. Last
year, the cost of real estate taxes was $800, though these costs vary from year to year.
Pharoah must make a payment of $500 with the rental payment each period to cover the insuran
Sheridan has on the warehouse.
Pharoah paid legal fees of $3,000 in executing the lease.
Assuming Pharoah's incremental borrowing rate is 5% and the rate implicit in the lease is unknown pre
the journal entry to record the initial lease liability and right-of-use asset for Pharoah. (List all debit er
before credit entries. 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
enter 0 for the amounts. For calculation purposes, use 5 decimal places as displayed in the fact
table provided and round final answers to 0 decimal places, e.g. 5,275.)
Click here to view factor tables.
sh
ant Titles and Explanation
ht-of-Use Asset
ne Liability
eTextbook and Media
List of Accounts
ave for Later
Debit
Credit
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