Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 14, Problem 19QS
To determine
Prepare the
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Preparing Lessee Journal Entries: Short-term Lease Election
Gomez Inc. entered into a contract on January 1 to lease a vehicle for one year, with monthly payments of $1,950 due at the end of each month. The vehicle has a fair value of $90,000. The lease agreement does not contain an option for purchase or renewal. The lessor's implicit rate of return is 5%.
Gomez Inc. elects the short-term leasing option.
Required
a. Prepare the entry for the first monthly payment on January 31.
Date
Jan. 31 Lease Expense
Cash
To record lease payment
Account Name
Date
Jan. 1
Dr.
To record lease payment
1,950
0
b. Assume instead that monthly lease payments are due at the beginning of the month. Record the entry for the monthly payment on January 1.
Account Name
Dr.
Cr.
Cr.
0
0
1,950 ✓
0x
0 x
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You and a colleague are reviewing a prospective lease transaction for your employer, Ma and Pa Kettle's (MPK). Having heard of the
new lease accounting standard update, your CFO has assigned you the task of assessing the impact of the lease transactions on the
company's financial statements. The terms are these: At the beginning of its fiscal year, MPK would lease restaurant space from Wilson
Corporation under a 10-year lease agreement. The contract calls for annual lease payments of $25,000 each at the end of each year.
The building was acquired last week by Wilson at a cost of $300,000 and is expected to have a useful life of 25 years with no residual
value for calculating straight-line depreciation. Wilson seeks a 10% return on its lease investments. (EV of $1, PV of $1. EVA of $1. PVA
of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
What will be the effect of the lease on MPK's earnings for the first year, and on…
Prepare the journal entries and adjusting journal entries necessary to record all of Red Robin's transactions
related to leases for 2022.
On January 1 of the current year (2022), Red Robin's leased a nonspecialized piece of equipment from an
equipment dealer. The lease agreement was signed on January 1 and the equipment was provided to Red Robin's
on the same day. The terms of the lease are as follows:
Payment: $28,740 every 6 months. The 1st payment occurred on January 1 of the current year. The 2nd and 3rd
payments occurred on June 30 and December 31 of the current year.
Lease term: 10 years.
Lessee guaranteed residual value: $4,800.
Fair value: $415,000
Carrying value: $415,000
Initial direct costs incurred by the lessor: $11,850.
There is no transfer of ownership or purchase option included in the contract. The economic life of the equipment
is 14 years.
An analysis of this lease is included in the "Lease" spreadsheet attached. The analysis includes a computation of
the implicit…
Chapter 14 Solutions
Principles of Financial Accounting.
Ch. 14 - A bond traded at 97 means that a. The bond pays...Ch. 14 - Prob. 2MCQCh. 14 - Prob. 3MCQCh. 14 - Prob. 4MCQCh. 14 - Prob. 5MCQCh. 14 - Prob. 1DQCh. 14 - Prob. 2DQCh. 14 - Prob. 3DQCh. 14 - Prob. 4DQCh. 14 - Prob. 5DQ
Ch. 14 - Prob. 6DQCh. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQCh. 14 - Prob. 11DQCh. 14 - Prob. 12DQCh. 14 - Prob. 13DQCh. 14 - Prob. 14DQCh. 14 - Prob. 15DQCh. 14 - Prob. 16DQCh. 14 - Prob. 17DQCh. 14 - Prob. 18DQCh. 14 - Prob. 19DQCh. 14 - Bond financing Identify the following as either an...Ch. 14 - Prob. 2QSCh. 14 - Prob. 3QSCh. 14 - Prob. 4QSCh. 14 - Prob. 5QSCh. 14 - Prob. 6QSCh. 14 - Prob. 7QSCh. 14 - Prob. 8QSCh. 14 - Prob. 9QSCh. 14 - Prob. 10QSCh. 14 - Prob. 11QSCh. 14 - Prob. 12QSCh. 14 - Bond features and terminology Enter the letter of...Ch. 14 - Prob. 14QSCh. 14 - Prob. 15QSCh. 14 - Prob. 16QSCh. 14 - Prob. 17QSCh. 14 - Prob. 18QSCh. 14 - Prob. 19QSCh. 14 - Prob. 20QSCh. 14 - Prob. 1ECh. 14 - Prob. 2ECh. 14 - Prob. 3ECh. 14 - Prob. 4ECh. 14 - Prob. 5ECh. 14 - Prob. 6ECh. 14 - Duval Co. issues four-year bonds with a 100,000...Ch. 14 - Prob. 8ECh. 14 - Prob. 9ECh. 14 - Prob. 10ECh. 14 - Prob. 11ECh. 14 - Prob. 12ECh. 14 - Prob. 13ECh. 14 - Prob. 14ECh. 14 - Prob. 15ECh. 14 - Prob. 16ECh. 14 - Prob. 17ECh. 14 - Prob. 18ECh. 14 - Prob. 19ECh. 14 - In each of the following separate cases, indicate...Ch. 14 - Prob. 21ECh. 14 - Prob. 22ECh. 14 - Prob. 1APCh. 14 - Prob. 2APCh. 14 - Prob. 3APCh. 14 - Prob. 4APCh. 14 - Prob. 5APCh. 14 - Prob. 6APCh. 14 - Prob. 7APCh. 14 - Prob. 8APCh. 14 - Prob. 9APCh. 14 - Prob. 10APCh. 14 - Prob. 11APCh. 14 - Refer to the lease details in Problem 14-11A....Ch. 14 - Prob. 1BPCh. 14 - Prob. 2BPCh. 14 - Prob. 3BPCh. 14 - Prob. 4BPCh. 14 - Prob. 5BPCh. 14 - Prob. 6BPCh. 14 - Prob. 7BPCh. 14 - Prob. 8BPCh. 14 - Prob. 9BPCh. 14 - Prob. 10BPCh. 14 - Prob. 11BPCh. 14 - Prob. 12BPCh. 14 - Prob. 14SPCh. 14 - Prob. 1AACh. 14 - Prob. 2AACh. 14 - Prob. 3AACh. 14 - Prob. 1BTNCh. 14 - Prob. 2BTNCh. 14 - Prob. 3BTNCh. 14 - Prob. 5BTN
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