Rahul Sheridan Corporation enters into a 6-year lease of equipment on December 31, 2024, which requires 6 annual payments of$41,000 each, beginning December 31, 2024. In addition, Sheridan guarantees the lessor a residual value of $21,300 at the end of thelease. However, Sheridan believes it is probable that the expected residual value at the end of the lease term will be $10,650. Theequipment has a useful life of 6 years.Prepare Sheridans' December 31, 2024, journal entries, assuming the implicit rate of the lease is 11% and this is known to Sheridan.(List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Ifno entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places asdisplayed in the factor table provided and round final answers to O decimal places e.g. 5,275.)Click here to view factor tables.DateDecember 31,2024December 31,2024Account Titles and Explanation(To record the lease liability)(To record lease payment)DebitCredit

Sheridan Corporation enters into a 6-year lease of equipment on December 31, 2024, which requires 6 annual payments of $41,000 each, beginning December 31, 2024. In addition, Sheridan guarantees the lessor a residual value of $21,300 at the end of the lease. However, Sheridan believes it is probable that the expected residual value at the end of the lease term will be $10,650. The equipment has a useful life of 6 years. Prepare Sheridans' December 31, 2024, journal entries, assuming the implicit rate of the lease is 11% and this is known to Sheridan.

Sheridan Corporation enters into a 6-year lease of equipment on December 31, 2024, which requires 6 annual payments of $41,000 each, beginning December 31, 2024. In addition, Sheridan guarantees the lessor a residual value of $21,300 at the end of the lease. However, Sheridan believes it is probable that the expected residual value at the end of the lease term will be $10,650. The equipment has a useful life of 6 years. Prepare Sheridans' December 31, 2024, journal entries, assuming the implicit rate of the lease is 11% and this is known to Sheridan.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 10MC: On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring...

See similar textbooks

Similar questions

On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?
Wildhorse Corporation enters into a 6-year lease of equipment on December 31, 2019, which requires 6 annual payments of $41,000 each, beginning December 31, 2019. In addition, Wildhorse guarantees the lessor a residual value of $21,300 at the end of the lease. However, Wildhorse believes it is probable that the expected residual value at the end of the lease term will be $11,300. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $170,000.Prepare Lost Ark’s 2019 and 2020 journal entries, assuming the implicit rate of the lease is 11% and this is known to Wildhorse. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275. Record journal entries in the order presented in the…
Oriole Corporation enters into a 5-year lease of equipment on December 31, 2024, which requires 5 annual payments of $36,200 each, beginning December 31, 2024. In addition, Oriole guarantees the lessor a residual value of $20,300 at the end of the lease. However, Oriole believes it is probable that the expected residual value at the end of the lease term will be $10,300. The equipment has a useful life of 5 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $120,000. Prepare Lost Ark's 2024 and 2025 journal entries, assuming the implicit rate of the lease is 10% and this is known to Oriole. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. For…
Pharoah Corporation enters into a 7-year lease of equipment on December 31, 2024, which requires 7 annual payments of $39,300 each, beginning December 31, 2024. In addition, Pharoah guarantees the lessor a residual value of $19,200 at the end of the lease. However, Pharoah believes it is probable that the expected residual value at the end of the lease term will be $9,600. The equipment has a useful life of 7 years. Prepare Pharoahs' December 31, 2024, journal entries, assuming the implicit rate of the lease is 9% and this is known to Pharoah. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Click here to view factor tables. Date Account Titles and…
Oriole Corporation enters into a 6-year lease of equipment on December 31, 2024, which requires 6 annual payments of $36,300 each, beginning December 31, 2024. In addition, Oriole guarantees the lessor a residual value of $18,400 at the end of the lease. However, Oriole believes it is probable that the expected residual value at the end of the lease term will be $9,200. The equipment has a useful life of 6 years. Prepare Orioles' December 31, 2024, journal entries, assuming the implicit rate of the lease is 11% and this is known to Oriole. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Click here to view factor tables. Date December 31, 2024 December 31,…
Headland Corporation enters into a 6-year lease of equipment on December 31, 2019, which requires 6 annual payments of $37,100 each, beginning December 31, 2019. In addition, Headland guarantees the lessor a residual value of $20,900 at the end of the lease. However, Headland believes it is probable that the expected residual value at the end of the lease term will be $10,450. The equipment has a useful life of 6 years. Prepare Headlands' December 31, 2019, journal entries assuming the implicit rate of the lease is 10% and this is known to Headland. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Click here to view factor tables. Date December 31, 2019 December 31, 2019 Account Titles and Explanation (To record the lease liability) (To record lease payment) Debit Credit
Cullumber Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2023, that requires 6 annual payments of $38,000 each, beginning September 1, 2023. In addition, Cullumber guarantees the lessor a residual value of $27,000 at lease end. The equipment has a useful life of seven years. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE OF 1. (a) Using (1) tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of the capital lease and prepare Cullumber's September 1, 2023 journal entry assuming an interest rate of 12%. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.)…
Vaughn Corporation enters into a 6-year lease of equipment on December 31, 2019, which requires 6 annual payments of $41,600 each, beginning December 31, 2019. In addition, Vaughn guarantees the lessor a residual value of $19,800 at the end of the lease. However, Vaughn believes it is probable that the expected residual value at the end of the lease term will be $9,900. The equipment has a useful life of 6 years. Prepare Vaughns' December 31, 2019, journal entries assuming the implicit rate of the lease is 10% and this is known to Vaughn. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.)
Indiana Jones Corporation enters into a 6-year lease of equipment on December 31, 2019, which requires six annual payments of $40,000 each, beginning December 31, 2019. In addition, Indiana Jones guarantees the lessor a residual value of $20,000 at the end of the lease. However, Indiana Jones believes it is probable that the expected residual value at the end of the lease term will be $10,000. The equipment has a useful life of 6 years. Prepare Indiana Jones' December 31, 2019, journal entries, assuming the implicit rate of the lease is 6% and this is known to Indiana Jones.
Blue Corporation enters into a 6-year lease of equipment on December 31, 2016, which requires 6 annual payments of $42,200 each, beginning December 31, 2016. In addition, Blue guarantees the lessor a residual value of $19,500 at the end of the lease. However, Blue believes it is probable that the expected residual value at the end of the lease term will be $9,500. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is $160,000.Prepare Lost Ark’s 2016 and 2017 journal entries, assuming the implicit rate of the lease is 10% and this is known to Blue
Metlock Corporation enters into a 6-year lease of equipment on January 1, 2017, which requires 6 annual payments of $38,200 each, beginning January 1, 2017. In addition, Metlock guarantees the lessor a residual value of $18,500 at the end of the lease. However, Metlock believes it is probable that the expected residual value at the end of the lease term will be $10,900. The equipment has a useful life of 7 years. Assume that for Lost Ark Company, the lessor, collectability of lease payments is probable and the carrying amount of the equipment is $208,718. Prepare Lost Ark’s 2016 and 2017 journal entries, assuming the implicit rate of the lease is 10% and this is known to Metlock.