Hayes Corp. is a manufacturer of truck trailers. On January 1, 2021, HayesCorp. leases ten trailers to Lester Company under a six-year noncancelablelease agreement. The following information about the lease and the trailersis provided:1. Equal annual payments that are due on January 1 each year provideHayes Corp. with an 8% return on net investment (present value factorfor 6 periods at 8% is 4.99271).2. Titles to the trailers pass to Lester at the end of the lease.3. The fair value of each trailer is $60,000. The cost of each trailer to HayesCorp. is $54,000. Each trailer has an expected useful life of nine years.4. Collectibility of the lease payments is probable.answer please:1. What type of lease is this for the lessor? Discuss how you made the determination. 2. Calculate the annual lease payment. (Round to nearest dollar.)3. Prepare a lease amortization schedule for Hayes Corp. for the first three years.4. Prepare the journal entries for the lessor for 2021 to record the leaseagreement, the receipt of the lease rentals, and the recognition of revenue (assume the use of a perpetual inventory method and round all amounts to the nearest dollar). Hayes Corp. is a manufacturer of truck trailers. On January 1, 2021, HayesCorp. leases ten trailers to Lester Company under a six-year noncancelablelease agreement. The following information about the lease and the trailersis provided:1. Equal annual payments that are due on January 1 each year provideHayes Corp. with an 8% return on net investment (present value factorfor 6 periods at 8% is 4.99271).2. Titles to the trailers pass to Lester at the end of the lease.3. The fair value of each trailer is $60,000. The cost of each trailer to HayesCorp. is $54,000. Each trailer has an expected useful life of nine years.4. Collectibility of the lease payments is probable.Instructions:1. What type of lease is this for the lessor? Discuss how you made thedetermination.2. Calculate the annual lease payment. (Round to nearest dollar.)3. Prepare a lease amortization schedule for Hayes Corp. for the first threeyears.4. Prepare the journal entries for the lessor for 2021 to record the leaseagreement, the receipt of the lease rentals, and the recognition ofrevenue (assume the use of a perpetual inventory method and round allamounts to the nearest dollar).

ANSWER:- 1. It is a sales-type lease to the lessor, Hayes Corp. Hayes’s (the manufacturer) profit…

Answered: Hayes Corp. is a manufacturer of truck…

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

Related questions

Concept explainers

Question

Hayes Corp. is a manufacturer of truck trailers. On January 1, 2021, Hayes
Corp. leases ten trailers to Lester Company under a six-year noncancelable
lease agreement. The following information about the lease and the trailers
is provided:
1. Equal annual payments that are due on January 1 each year provide
Hayes Corp. with an 8% return on net investment (present value factor
for 6 periods at 8% is 4.99271).
2. Titles to the trailers pass to Lester at the end of the lease.
3. The fair value of each trailer is $60,000. The cost of each trailer to Hayes
Corp. is $54,000. Each trailer has an expected useful life of nine years.
4. Collectibility of the lease payments is probable.

answer please:
1. What type of lease is this for the lessor? Discuss how you made the determination.

2. Calculate the annual lease payment. (Round to nearest dollar.)

3. Prepare a lease amortization schedule for Hayes Corp. for the first three years.

4. Prepare the journal entries for the lessor for 2021 to record the lease
agreement, the receipt of the lease rentals, and the recognition of revenue (assume the use of a perpetual inventory method and round all amounts to the nearest dollar).

Hayes Corp. is a manufacturer of truck trailers. On January 1, 2021, Hayes
Corp. leases ten trailers to Lester Company under a six-year noncancelable
lease agreement. The following information about the lease and the trailers
is provided:
1. Equal annual payments that are due on January 1 each year provide
Hayes Corp. with an 8% return on net investment (present value factor
for 6 periods at 8% is 4.99271).
2. Titles to the trailers pass to Lester at the end of the lease.
3. The fair value of each trailer is $60,000. The cost of each trailer to Hayes
Corp. is $54,000. Each trailer has an expected useful life of nine years.
4. Collectibility of the lease payments is probable.
Instructions:
1. What type of lease is this for the lessor? Discuss how you made the
determination.
2. Calculate the annual lease payment. (Round to nearest dollar.)
3. Prepare a lease amortization schedule for Hayes Corp. for the first three
years.
4. Prepare the journal entries for the lessor for 2021 to record the lease
agreement, the receipt of the lease rentals, and the recognition of
revenue (assume the use of a perpetual inventory method and round all
amounts to the nearest dollar).

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.