FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by t…
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable ari…
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On January 1, 2022, Blossom Inc., a construction company, leased an excavator from Crane Inc. The lease terms are as follows: • Annual lease payments of $23,600 at the beginning of each year for five years At the end of the lease term the asset reverts back to the lessor and the residual value guarantee is $12,000 The incremental borrowing rate is 7% and the implicit rate in the lease is 6% (known by the lessee) Blossom Inc. has a December 31 year end Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare the journal entries for 2022 for Blossom Inc. Assume Blossom Inc. follows IFRS. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. Round factor values to 5 decimal places, e.g. 1.25124. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date 1. 1, 2022 Account Titles and Explanation Right-of-Use Asset Lease Liability Cash c. 31, 2022 Depreciation Expense Accumulated Depreciation - Right-of-Use Asset (To record depreciation) c. 31, 2022 Interest Expense Lease Liability (To record interest) Debit 114301 90701 22860 5442 Credit 23600 22860 5442
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Transcribed Image Text:On January 1, 2022, Blossom Inc., a construction company, leased an excavator from Crane Inc. The lease terms are as follows: • Annual lease payments of $23,600 at the beginning of each year for five years At the end of the lease term the asset reverts back to the lessor and the residual value guarantee is $12,000 The incremental borrowing rate is 7% and the implicit rate in the lease is 6% (known by the lessee) Blossom Inc. has a December 31 year end Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare the journal entries for 2022 for Blossom Inc. Assume Blossom Inc. follows IFRS. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. Round factor values to 5 decimal places, e.g. 1.25124. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date 1. 1, 2022 Account Titles and Explanation Right-of-Use Asset Lease Liability Cash c. 31, 2022 Depreciation Expense Accumulated Depreciation - Right-of-Use Asset (To record depreciation) c. 31, 2022 Interest Expense Lease Liability (To record interest) Debit 114301 90701 22860 5442 Credit 23600 22860 5442
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Step 1: Introduction to lease
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Step 2: Computation of right-of-use asset, depreciation and interest expense
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Step 3: Preparing the journal entries
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