Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Chapter 3, Problem 16P
Using the chart of accounts in Figure 2-1, determine the changes to the balance sheet, income statement,
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Prepare the journal entries that the lessee should make to record the above transactions assuming the entities report under ASPE. (List
all debit entries 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 and enter O for the amounts.)
The lessee makes a lease payment of $75,200 to the lessor for equipment in an operating lease transaction.
Wildhorse Company leases equipment from Noble Construction Inc. The present value of the lease payments is $658,000.
The lease qualifies as a capital lease..
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During the following year, Shane Company paid the following items:
1. Ad valorem taxes of $2,000 on Lease A.
2. Dry hole contribution of $15,000 on Lease B.
Journalised the above transactions.
For the toolbar, press ALT+F10 (PCC) or ALT+FN+F10 (Mac).
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田田国田用因
Thrasher Construction Co. was contracted to construct a building for $1,045,000. The building is owned by the customer throughout
the contract period. The contract provides for progress payments. Thrasher's accounting year ends 31 December. Work began under
the contract on 1 July 20X5, and was completed on 30 September 20X7. Construction activities are summarized below by year:
20X5 Construction costs incurred during the year, $192,600; estimated costs to complete,
$674,100; progress billings during the year, $163,500; and collections, $149,800.
20x6 Construction costs incurred during the year, $481,500; estimated costs to complete,
$203,300; progress billing during the year, $409,100; and collections, $406,600.
20X7 Construction costs incurred during the year, $209,000. Because the contract was
completed, the remaining balance was billed and later collected in full per the
contract.
Required:
1. Prepare Thrasher's journal entries to record these events. Assume that percentage of…
Chapter 3 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 3 - How do the relationships between the balance...Ch. 3 - Which of the transactions from this chapter result...Ch. 3 - Prob. 3DQCh. 3 - Which of the transactions from this chapter result...Ch. 3 - Prob. 5DQCh. 3 - Prob. 6DQCh. 3 - The following invoices are being entered into the...Ch. 3 - Prob. 9PCh. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...
Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...Ch. 3 - Using the chart of accounts in Figure 2-1,...
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- Larkspur Leasing Company signs a lease agreement on January 1, 2025, to lease electronic equipment to Crane Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement. 1. Crane has the option to purchase the equipment for $27,000 upon termination of the lease. It is not reasonably certain that Crane will exercise this option. 2. The equipment has a cost of $330, 000 and fair value of $368,000 to Larkspur Leasing. The useful economic life is 2 years, with a residual value of $27,000. 3. Larkspur Leasing desires to earn a return of 6% on its investment. 4. Collectibility of the payments by Larkspur Leasing is probable. Prepare the journal entries on the books of Larkspur Leasing to record the payments received under the lease and to recognize income for the years 2025 and 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is…arrow_forward[The following information applies to the questions displayed below.] On November 1, 2022, Gordon Company collected $7,680 in cash from its tenant as an advance rent payment on its store location. The six-month lease period ends on April 30, 2023, at which time the contract may be renewed. quired: 1. Use the horizontal model to record the effect of the six months of rent collected in advance on November 1, 2022 for Gordon Company. 2. Use the horizontal model to record the effect of the adjustment that will be made at the end of each month to show the amount of rent "earned" during the month for Gordon Company. Complete this question by entering your answers in the tabs below. Answer is not complete. Required A1 Required A2 Use the horizontal model to record the effect of the adjustment that will be made at the end of each month to show the amount of rent "earned" during the month for Gordon Company. Note: Enter decreases with a minus sign to indicate a negative financial statement…arrow_forwardOn December 1, 2019, an advance rent payment of $14,400, representing a three-month prepayment for the months of December, January, and February, was received in cash from the company's tenant. Required: Complete the below table Indicate the financial statement effect. (Enter decreases with a minus sign to indicate a negative financial statement effect.) Use the horizontal model to record the effects of the following items: a. The three months of rent collected in advance on December 1, 2019. Balance Sheet Liabilities Assets Stockholders Equity Net income Cash 14.400 S b. The adjustment that will be made at the end of each month to show the amount of rent "earned" during the month. Balance Sheet Liabilities Stockholders' Equity Assets Net income Income Statement Revenues Income Statement Revenues Expenses Expenses Check my warrow_forward
- On October 1, 2019, Viking Trivia Company paid $72,000 for a two-year lease on an office building. The payment was recorded as prepaid rent, and the lease commenced on the date of payment. Debit Account: Debit Amount: Credit Account: Credit Amount:arrow_forwardThe following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pharoah Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $116,406 Residual value of equipment at end of lease term, guaranteed by the lessee $5000 Expected residual value of equipment at end of lease term $45,000 6 years 6 years Lease term Economic life of leased equipment Fair value of asset at January 1, $642,000 Lessor's implicit rate 6 % Lessee's incremental borrowing rate 6 % The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line amortization for all leased equipment. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, eg 1.25124 and the final answers to O decimal places eg. 5,275.) PHAROAH COMPANY (Lessee) Lease Amortization Schedule Annual Lease Payment Plus…arrow_forwardBaillie Power leased high-tech electronic equipment from Courtney Leasing on January 1, 2021. Courtney purchased the equipment from Doane Machines at a cost of $252,000, its fair value. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly lease payments Economic life of asset Interest rate charged by the lessor 2 years (8 quarterly periods) $17,000 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter 5 years 12% Required: Prepare a lease amortization schedule and appropriate entries for Baillie Power from the beginning of the lease through December 31, 2021. December 31 is the fiscal year end for each company. Appropriate adjusting entries are recorded at the end of each quarter. X Answer is not complete. Complete this question by entering your answers in the tabs below.arrow_forward
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