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January 1, 2024, Paradise Partners decides to upgrade recreational equipment at its resorts. The company is contemplating whether ton purchase or lease the new equipment. Use PV of $1 and EVA of $1. (Use appropriate factor(s) from the tables provided.) Required: 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% installment note. Payments of $12.356.17 are due at the end of each month, and the first installment is due on January 31, 2024. Record the Issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9.492.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, record the lease. 3. As of January 1, 2024, does the installment note or the lease have a greater effect on increasing the company's amount of reported debt, and by how much? 4. Suppose the equipment has a total value of $114,000 at the end of the 21-month period, which option (purchasing with installment note or leasing) would likely be better? Answer is complete and correct. Complete this question by entering your answers in the tabs below. Rea 1 and 2 Req3 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% installment note. Payments of $12,356.17 ore due at the end of each month, and the first installment is due on January 31, 2024. Record the issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9,402.50 at the end of each month, beginning January 31, 2024, At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%

January 1, 2024, Paradise Partners decides to upgrade recreational equipment at its resorts. The company is contemplating whether ton purchase or lease the new equipment. Use PV of $1 and EVA of $1. (Use appropriate factor(s) from the tables provided.) Required: 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% installment note. Payments of $12.356.17 are due at the end of each month, and the first installment is due on January 31, 2024. Record the Issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9.492.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, record the lease. 3. As of January 1, 2024, does the installment note or the lease have a greater effect on increasing the company's amount of reported debt, and by how much? 4. Suppose the equipment has a total value of $114,000 at the end of the 21-month period, which option (purchasing with installment note or leasing) would likely be better? Answer is complete and correct. Complete this question by entering your answers in the tabs below. Rea 1 and 2 Req3 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% installment note. Payments of $12,356.17 ore due at the end of each month, and the first installment is due on January 31, 2024. Record the issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9,402.50 at the end of each month, beginning January 31, 2024, At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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January 1, 2024, Paradise Partners decides to upgrade recreational equipment at its resorts. The company is contemplating whether to purchase or lease the new equipment. Use PV of $1 and PVA of $1. (Use appropriate factor(s) from the tables provided.) Required: 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% Installment note. Payments of $12.356.17 are due at the end of each month, and the first installment is due on January 31, 2024. Record the Issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9.492.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, record the lease. 3. As of January 1, 2024, does the installment note or the lease have a greater effect on increasing the company's amount of reported debt, and by how much? 4. Suppose the equipment has a total value of $114,000 at the end of the 21 month period, which option (purchasing with installment note or leasing) would likely be better? Answer is complete and correct. Complete this question by entering your answers in the tabs below. Rea 1 and 2 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% installment note. Payments of $12,356.17 ore due at the end of each month, and the first installment is due on January 31, 2024. Record the issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9,492.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, Req 4
Transcribed Image Text:January 1, 2024, Paradise Partners decides to upgrade recreational equipment at its resorts. The company is contemplating whether to purchase or lease the new equipment. Use PV of $1 and PVA of $1. (Use appropriate factor(s) from the tables provided.) Required: 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% Installment note. Payments of $12.356.17 are due at the end of each month, and the first installment is due on January 31, 2024. Record the Issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9.492.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, record the lease. 3. As of January 1, 2024, does the installment note or the lease have a greater effect on increasing the company's amount of reported debt, and by how much? 4. Suppose the equipment has a total value of $114,000 at the end of the 21 month period, which option (purchasing with installment note or leasing) would likely be better? Answer is complete and correct. Complete this question by entering your answers in the tabs below. Rea 1 and 2 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% installment note. Payments of $12,356.17 ore due at the end of each month, and the first installment is due on January 31, 2024. Record the issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9,492.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, Req 4
Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 4 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% installment note. Payments of $12,356.17 are due at the end of each month, and the first installment is due on January 31, 2024. Record the issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9,492.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, record the lease. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Show less A No Req 3 1 2 Date January 01, 2024 Equipment Notes Payable January 01, 2024 Lease Asset Lease Payable General Journal >> >> ♡ Req 3 > Debit 233,000 179,000 Credit 233,000 179,000
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 4 1. The company can purchase the equipment by borrowing $233,000 with a 21-month, 12% installment note. Payments of $12,356.17 are due at the end of each month, and the first installment is due on January 31, 2024. Record the issuance of the installment note payable for the purchase of the equipment. 2. The company can sign a 21-month lease for the equipment by agreeing to pay $9,492.50 at the end of each month, beginning January 31, 2024. At the end of the lease, the equipment must be returned. Assuming a borrowing rate of 12%, record the lease. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Show less A No Req 3 1 2 Date January 01, 2024 Equipment Notes Payable January 01, 2024 Lease Asset Lease Payable General Journal >> >> ♡ Req 3 > Debit 233,000 179,000 Credit 233,000 179,000
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