Prepare Blossom 2025 journal entries, assuming the company uses straight-line depreciation and no salvage value. (List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

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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Cullumber Corporation agrees on January 1, 2025, to lease equipment from Blossom, Inc. for 3 years. The lease calls for annual lease
payments of $24,000 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is
not a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less
than 90% of the fair value of the equipment. Assume that for Blossom, Inc., the lessor, the collectibility of the lease payments is
probable, and the fair value and cost of the equipment is $198,000.
Prepare Blossom 2025 journal entries, assuming the company uses straight-line depreciation and no salvage value. (List all debit entries
before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are
automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Date
Account Titles and Explanation
(To record the recognition of the revenue each period)
(To record depreciation expense on the leased
equipment)
Debit
4005 Close
Credit
Transcribed Image Text:Cullumber Corporation agrees on January 1, 2025, to lease equipment from Blossom, Inc. for 3 years. The lease calls for annual lease payments of $24,000 at the beginning of each year. The lease does not transfer ownership, contain a bargain purchase option, and is not a specialized asset. In addition, the economic life of the equipment is 10 years, and the present value of the lease payments is less than 90% of the fair value of the equipment. Assume that for Blossom, Inc., the lessor, the collectibility of the lease payments is probable, and the fair value and cost of the equipment is $198,000. Prepare Blossom 2025 journal entries, assuming the company uses straight-line depreciation and no salvage value. (List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation (To record the recognition of the revenue each period) (To record depreciation expense on the leased equipment) Debit 4005 Close Credit
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