Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. problem 3 hood leased equipment from rowe on janua

Problem 3 Hood leased equipment from Rowe on January 1, 2021. Rowe manufactured the equipment at a...

Free

80.2K

Verified Solution

Question

Accounting

Problem 3

Hood leased equipment from Rowe on January 1, 2021. Rowemanufactured the equipment at a cost of $200,000. Both lessee andlessor have December 31 year ends. Lease terms: Lease term 5 years,(20 quarterly periods) Quarterly payments, $15,000 beginning Jan 1,Mar 31, June 30, Sept.,30 and Dec. 31. Economic life of asset, 5years Interest rate charged by lessor, 10% Depreciation is recordedquarterly

Required:

1. Prepare appropriate journal entries for the lessee at itsbeginning, January 1 2021, and on March 31.

2. Prepare appropriate journal entries for the lessor at itsbeginning, January 1 2021, and on March 31.

Answer & Explanation Solved by verified expert
3.8 Ratings (474 Votes)

ANSWER

Period Lease Payment PV Factor @2.5% Present Value
1                15,000 1             15,000
         2                15,000 0.975610             14,634
3                15,000 0.951814             14,277
4                15,000 0.928599             13,929
5                15,000 0.905951             13,589
6                15,000 0.883854             13,258
7                15,000 0.862297             12,934
8                15,000 0.841265             12,619
9                15,000 0.820747             12,311
10                15,000 0.800728             12,011
11                15,000 0.781198             11,718
12                15,000 0.762145             11,432
13                15,000 0.743556             11,153
14                15,000 0.725420             10,881
15                15,000 0.707727             10,616
16                15,000 0.690466             10,357
17                15,000 0.673625             10,104
18                15,000 0.657195               9,858
19                15,000 0.641166               9,617
20                15,000 0.625528               9,383
Total            300,000         239,684
1.) Date Account Titles Debit $ Credit $
January 1,2021 Right of use assets          239,684
Lease liability 239,684
Mar.31,2021 Lease liability               9,008
Interest Expense               5,992
( 239,684 x 2.5% )
Cash 15000
Mar.31,2021 Amortization Expense             11,984
Right of use assets      11,984
( 239,684 / 20 )
2.) Date Account Titles Debit $ Credit $
January 1,2021 Lease Receivable          239,684
Cost of goods sold          200,000
Sales Revenue 239,684
Equipment 200,000
Mar.31,2021 Cash             15,000
Interest Revenue        5,992
( 239,684 x 2.5% )
Lease Receivable        9,008

================

DEAR STUDENT,

IF YOU HAVE ANY QUERY PLEASE ASK ME IN THE COMMENT BOX,I AM HERE TO HELP YOU.PLEASE GIVE ME POSITIVE RATING..

****************THANK YOU****************
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

19 Ethan is flying a kite at an angle of 57 1 m above grou...

Calculus
1.2K views

1 5 Tranformations The solid blue graph below is the original function The red dashed...

Calculus
1.2K views

First make a substitution and then use integration by parts to evaluate the integral 11...

Calculus
1.2K views

Given the curve x xy 2y 6 a Find an expression for the slope of...

Algebra
1.2K views

1 point A cable hangs between two poles of equal height and 37 feet apart...

Algebra
1.2K views

g x logg 1 1 The domain of g is

Accounting
1.2K views

Accounts receivable increased by 9,000 Inventory decreased by 20,000 Supplies increased by 28,000 Accounts payable...

Accounting
1.2K views

Question 5 The following information on selected cash transactions for the year has been provided...

Accounting
1.2K views

Activity-Based Customer-Driven Costs Suppose that Stillwater Designs has two classes of distributors: JIT...

Accounting
1.2K views

During the year, Wright Company sells 465 remote-control airplanes for $100 each. The company has...

Finance
1.2K views

1. The balance sheet consists of assets and liabilities and equity. With a focus on...

Accounting
1.2K views

If the debit side total is more than the credit side, the ledger account will...