Rand Medical manufactures lithotripters. Lithotripsy uses shockwaves instead of surgery to eliminate kidney stones. Physicians’Leasing purchased a lithotripter from Rand for $2,300,000 andleased it to Mid-South Urologists Group, Inc., on January 1, 2021.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of$1)
| Lease Description: | | | |
| Quarterly lease payments | $ | 150,093—beginning of each period | |
| Lease term | | 5 years (20 quarters) | |
| No residual value; no purchase option | | | |
| Economic life of lithotripter | | 5 years | |
| Implicit interest rate and lessee's incremental borrowingrate | | 12% | |
| Fair value of asset | $ | 2,300,000 | |
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1. How should this lease be classified by Mid-South UrologistsGroup and by Physicians' Leasing.
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| | | Mid-South Urologists Group | | | Physicians' Leasing | |
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2.Prepare appropriate entries for Mid-South Urologists Groupfrom the beginning of the lease through the second rental paymenton April 1, 2021. Adjusting entries are recorded at the end of eachfiscal year (December 31). (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field. Enter your answers in whole dollars and not in themillions of dollars. Round your answers to nearest wholedollars.
Journal entry worksheet
3..Prepare appropriate entries for Mid-South Urologists Groupfrom the beginning of the lease through the second rental paymenton April 1, 2021. Adjusting entries are recorded at the end of eachfiscal year (December 31). (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field. Enter your answers in whole dollars and not in themillions of dollars. Round your answers to nearest wholedollars.)
Journal entry worksheet
4.Prepare appropriate entries for Mid-South Urologists Groupfrom the beginning of the lease through the second rental paymenton April 1, 2021. Adjusting entries are recorded at the end of eachfiscal year (December 31). (If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field. Enter your answers in whole dollars and not in themillions of dollars. Round your answers to nearest wholedollars.
