On January 1, 2024, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Aqua The equipment cost Aqua $427,906 and has an expected economic life of five years. • Aqua and Maywood expect the residual value at December 31, 2027, to be $64,000. Negotiations led to Maywood guaranteeing a $91,000 residual value. Equal payments under the lease are $128,000 and are due on December 31 of each year with the first payment being made on December 31, 2024 Maywood is aware that Aqua used a 5% interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) . . Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1/2024 and December 31, 2024, related to the lease. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar. View transaction list View journal entry worksheet / No 1 2 3 Date January 01, 2024 Right-of-use asset Lease payable December 31, 2024 December 31, 2024 Amortization expense Right-of-use asset Interest expense Lease payable Cash General Journal Debit Credit
On January 1, 2024, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Aqua The equipment cost Aqua $427,906 and has an expected economic life of five years. • Aqua and Maywood expect the residual value at December 31, 2027, to be $64,000. Negotiations led to Maywood guaranteeing a $91,000 residual value. Equal payments under the lease are $128,000 and are due on December 31 of each year with the first payment being made on December 31, 2024 Maywood is aware that Aqua used a 5% interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) . . Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1/2024 and December 31, 2024, related to the lease. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar. View transaction list View journal entry worksheet / No 1 2 3 Date January 01, 2024 Right-of-use asset Lease payable December 31, 2024 December 31, 2024 Amortization expense Right-of-use asset Interest expense Lease payable Cash General Journal Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2024, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31.
2027, at which time possession of the leased asset will revert back to Aqua
• The equipment cost Aqua $427,906 and has an expected economic life of five years.
• Aqua and Maywood expect the residual value at December 31, 2027, to be $64,000.
Negotiations led to Maywood guaranteeing a $91,000 residual value
.
• Equal payments under the lease are $128,000 and are due on December 31 of each year with the first payment being made on
December 31, 2024
• Maywood is aware that Aqua used a 5% interest rate when calculating lease payments.
Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1)
Required:
1. & 2. Prepare the appropriate entries for Maywood on January 1,2024 and December 31, 2024, related to the lease.
Note: If no entry is required for a transaction/event, select "No journal entry required" the first account field. Do not round
intermediate calculations. Round your final answers to the nearest whole dollar.
View transaction list View journal entry worksheet
No
1
2
3
Date
January 01, 2024 Right-of-use asset
Lease payable
December 31, Amortization expense
2024
Right-of-use asset
December 31,
2024
Interest expense
Lease payable
Cash
General Journal
Debit
Credit
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