On January 1, 2025, Sunland Animation sold a truck to Carla Vista Finance for $48,000 and immediately leased it back. The truck was carried on Sunland's books at $44,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Sunland at lease-end. The lease requires five equal rental payments of $11,395 at the end of each year (first payment on January 1 , 2026). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Sunland's 2025 journal entries. (List all debit entries before credit entries.
On January 1, 2025, Sunland Animation sold a truck to Carla Vista Finance for $48,000 and immediately leased it back. The truck was carried on Sunland's books at $44,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Sunland at lease-end. The lease requires five equal rental payments of $11,395 at the end of each year (first payment on January 1 , 2026). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Sunland's 2025 journal entries. (List all debit entries before credit entries.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2025, Sunland Animation sold a truck to Carla Vista Finance for $48,000 and immediately leased it back. The truck was carried on Sunland's books at $44,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Sunland at lease-end. The lease requires five equal rental payments of $11,395 at the end of each year (first payment on January 1 , 2026). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Sunland's 2025
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