FINANCIAL & MANAGERIAL ACCOUNTING
9th Edition
ISBN: 9781266640667
Author: Wild
Publisher: MCG
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Chapter 10, Problem 12PSA
a
To determine
Concept Introduction:
Lease liabilities: A Lease is an agreement between the owner of the asset and the tenant that grants the tenant the right to use the asset for a period of time in return for cash. Accounting for lease can be classified into the operating lease and financial lease. An operating lease is a contract in which the owner retains the risk and rewards of ownership, whereas a financial lease is in which the lessor transfers all risks and rewards of ownership to the lessee.
The
b
To determine
Concept Introduction:
Lease liabilities: A Lease is an agreement between the owner of an asset and the tenant that grants the tenant the right to use the asset for a period of time in return for cash. Accounting for a lease can be classified into an operating lease and a finance lease. An operating lease is a contract in which the owner retains the risk and rewards of ownership, whereas a financial lease is in which the lessor transfers all risks and rewards of ownership to the lessee.
The journal entry for the first-year lease payment
c
To determine
Concept Introduction:
Lease liabilities: A Lease is an agreement between the owner of the asset and the tenant that grants the tenant the right to use the asset for a period of time in return for cash. Accounting for a lease can be classified into an operating lease and a finance lease. An operating lease is a contract in which the owner retains the risk and rewards of ownership, whereas a financial lease is in which the lessor transfers all risks and rewards of ownership to the lessee.
The journal entry to record straight-line amortization for three years
d
To determine
Concept Introduction:
Lease liabilities: A Lease is an agreement between the owner of the asset and the tenant that grants the tenant the right to use the asset for a period of time in return for cash. Accounting for a lease can be classified into an operating lease and a finance lease. An operating lease is a contract in which the owner retains the risk and rewards of ownership, whereas a financial lease is in which the lessor transfers all risks and rewards of ownership to the lessee.
The journal entry for lease payments at the end of years 1 and 2
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Students have asked these similar questions
On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease
requires three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 of
Year 1 and Year 2). The present value of the three annual lease payments is $51,000, using a 6.003% interest rate. The
lease payment schedule follows.
Date
January 1, Year 1
December 31, Year 1
December 31, Year 2
View transaction list
Journal entry worksheet
1
(A) Beginning
Balance of
Lease
Liability
$ 51,000
33,000
16,981
2. Prepare the January 1 journal entry to record the first $18,000 cash lease payment.
Note: Enter debits before credits.
(B) Debit
Interest on
Lease Liability
6.003% X (A)
$0
1,981
1,019
$ 3,000
Record the first lease payment on January 1.
Date
Year 1 January
01
+
General Journal
(C) Debit
Lease
Liability (D)
(B)
$ 18,000
16,019
16,981
$ 51,000
Debit
Credit
(D) Credit
Cash Lease
Payment
$ 18,000
18,000
18,000
$ 54,000
(E) Ending…
On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease
requires three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 of
Year 1 and Year 2). The present value of the three annual lease payments is $51,000, using a 6.003% interest rate. The
lease payment schedule follows.
Date
January 1, Year 1
December 31, Year 1
December 31, Year 2
View transaction list
1
Journal entry worksheet
2
(A) Beginning
Balance of
Lease
Liability
3
$ 51,000
33,000
16,981
Note: Enter debits before credits.
Date
Year 1
December 31
(B) Debit
Interest on
Lease Liability
6.003% X (A)
3. Prepare the December 31 journal entry to record straight-line amortization with zero salvage value at the end of (a) Year 1, (b) Year 2,
and (c) Year 3.
1,981
1,019
$ 3,000
+
General Journal
(C) Debit
Lease
Liability (D)
(B)
$ 18,000
16,019
16,981
$ 51,000
Record amortization of right-of use asset at December 31 of…
On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a operating lease. The lease requires
three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2) The
present value of the three annual lease payments is $51,000, using a 6.003% interest rate. The lease payment schedule follows.
Date
January 1, Year 1
December 31, Year 1
December 31, Year 2
Required 1
No
1
(A) Beginning (B) Debit
Balance of
2
Lease
Liability
$ 51,000
33,000
16,981
Required 2
3
Interest on
Lease Liability
6.003% X (A)
Complete this question by entering your answers in the tabs below.
Required:
1. Prepare the January 1 journal entry at the start of the lease to record any asset or liability.
2. Prepare the January 1 journal entry to record the first $18,000 cash lease payment.
3. Prepare the December 31 journal entry to record amortization at the end of (a) Year 1, (b) Year 2, and (c) Year 3.
4. Prepare the…
Chapter 10 Solutions
FINANCIAL & MANAGERIAL ACCOUNTING
Ch. 10 - Prob. 1QSCh. 10 - Prob. 2QSCh. 10 - Prob. 3QSCh. 10 - Prob. 4QSCh. 10 - Prob. 5QSCh. 10 - Prob. 6QSCh. 10 - Prob. 7QSCh. 10 - Prob. 8QSCh. 10 - Prob. 9QSCh. 10 - Prob. 10QS
Ch. 10 - Prob. 11QSCh. 10 - Prob. 12QSCh. 10 - Prob. 13QSCh. 10 - Prob. 14QSCh. 10 - Prob. 15QSCh. 10 - Prob. 16QSCh. 10 - Prob. 17QSCh. 10 - Prob. 18QSCh. 10 - Prob. 19QSCh. 10 - Prob. 20QSCh. 10 - Prob. 21QSCh. 10 - Prob. 22QSCh. 10 - Prob. 23QSCh. 10 - Prob. 24QSCh. 10 - Prob. 1ECh. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Prob. 6ECh. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Prob. 9ECh. 10 - Prob. 10ECh. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Prob. 21ECh. 10 - Prob. 22ECh. 10 - Prob. 23ECh. 10 - Prob. 1PSACh. 10 - Prob. 2PSACh. 10 - Prob. 3PSACh. 10 - Prob. 4PSACh. 10 - Prob. 5PSACh. 10 - Prob. 6PSACh. 10 - Prob. 7PSACh. 10 - Prob. 8PSACh. 10 - Prob. 9PSACh. 10 - Prob. 10PSACh. 10 - Prob. 11PSACh. 10 - Prob. 12PSACh. 10 - Prob. 13PSACh. 10 - Prob. 1PSBCh. 10 - Prob. 2PSBCh. 10 - Prob. 3PSBCh. 10 - Prob. 4PSBCh. 10 - Prob. 5PSBCh. 10 - Prob. 6PSBCh. 10 - Prob. 7PSBCh. 10 - Prob. 8PSBCh. 10 - Prob. 9PSBCh. 10 - Prob. 10PSBCh. 10 - Problem 10-10BB Effective Interest: Amortization...Ch. 10 - Prob. 12PSBCh. 10 - Prob. 13PSBCh. 10 - Prob. 10SPCh. 10 - Prob. 1.1AACh. 10 - Prob. 1.2AACh. 10 - Prob. 1.3AACh. 10 - Prob. 2.1AACh. 10 - Prob. 2.2AACh. 10 - Prob. 2.3AACh. 10 - Prob. 3.1AACh. 10 - Prob. 3.2AACh. 10 - Prob. 3.3AACh. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - What is the issue price of a $2,000 bond sold at...Ch. 10 - Prob. 11DQCh. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - Prob. 14DQCh. 10 - Prob. 15DQCh. 10 - Prob. 1BTNCh. 10 - Prob. 2BTNCh. 10 - Prob. 3BTNCh. 10 - Prob. 4BTN
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