I need 1,2,3& 4 requirement 3. & 4. Prepare the appropriate entries related to the lease on December 31, 2024 and 2026.Complete this question by entering your answers in the tabs below.Req 1Prepare the appropriate entries related to the lease on December 31, 2024 and 2026.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers inwhole dollars and not in millions. Round your intermediate and final answers to the nearest whole dollar.View transaction list<Journal entry worksheetReq 21Req 1Note: Enter debits before credits.Record the lease payment and interest expense for American Food Services.Date2December 31, 2024<Show Transcribed TextReq 3 and 4View transaction list1Req 23Complete this question by entering your answers in the tabs below.43. & 4. Prepare the appropriate entries related to the lease on December 31, 2024 and 2026.2DateJournal entry worksheetGeneral JournalDecember 31, 2024Clear antesReq 3 and 4Prepare the appropriate entries related to the lease on December 31, 2024 and 2026.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers inwhole dollars and not in millions. Round your intermediate and final answers to the nearest whole dollar.3Note: Enter debits before credits.DebitRecord the lease payment and interest expense for American Food Services.General JournalCreditView osonral JournalCleac anforDebitc>CreditView osonral Journal> i need requirements 1,2,3 & 4.American Food Services, Incorporated leased a packaging machine from Barton and Barton Corporation. Barton and Bartoncompleted construction of the machine on January 1, 2024. The lease agreement for the $5,1 million (fair value and present value ofthe lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to befour years with no residual value. Barton and Barton's implicit interest rate was 11%.Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1)Required:1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2024.2. Prepare an amortization schedule for the four-year term of the lease.3. & 4. Prepare the appropriate entries related to the lease on December 31, 2024 and 2026.Complete this question by entering your answers in the tabs below.Req 1View transaction stPrepare the journal entry for American Food Services at the beginning of the lease on January 1, 2024.Note: Enter your answers in whole dollars and not in millions. If no entry is required for a transaction/event, select "No journal entryrequired in the first account field.<Reg 2Journal entry worksheetRecord the beginning of the lease for American Food Services.Note: Enter debits before credits.Req 3 and 4Show Transcribed TextAmerican Food Services, Incorporated leased a packaging machine from Barton and Barton Corporation. Barton and Bartoncompleted construction of the machine on January 1, 2024. The lease agreement for the $5.1 million (fair value and present value ofthe lease payments) machine specified four equal payments at the end of each year. The useful life of the machine was expected to befour years with no residual value. Barton and Barton's implicit interest rate was 11%.Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. FVAD of $1 and PVAD of $1)Req 1Required:1. Prepare the journal entry for American Food Services at the beginning of the lease on January 1, 2024.2. Prepare an amortization schedule for the four-year term of the lease.3. & 4. Prepare the appropriate entries related to the lease on December 31, 2024 and 2026.YearComplete this question by entering your answers in the tabs below.2024202520262027TotalReq 2ĴPrepare an amortization schedule for the four-year term of the lease.Note: Enter your answers in whole dollars and not in millions. Round your intermediate and final answers to the nearest wholedollar.LeasePaymentsReq 3 and 4Lease Amortization ScheduleEffectiveInterestDecrease in OutstandingBalanceBalance(Reg 10Req 3 and 4 >

Journal entry to record lease includes debit to equipment and credit to lease payable Lease payment…

Answered: I need 1,2,3& 4 requirement

Business

Accounting

I need 1,2,3& 4 requirement

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...

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Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.
Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6 years at 2,000 per month or to purchase the equipment for 25,000 (a price considerably less than the expected fair value) after the initial lease term of 4 years. Why would this lease qualify as a finance lease?
On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910
Lessee and Lessor Accounting Issues Diego Leasing Company agrees to provide La Jolla Company with equipment under a noncancelable lease for 5 years. The equipment has a 5-year life, cost Diego 25,000, and will have no residual value when the lease term ends. The fair value of the equipment is 30,000. La Jolla agrees to pay all executory costs (500 per year) throughout the lease period directly to a third party. On January 1, 2019, the equipment is delivered. Diego expects a 14% return on its net investment. The five equal annual rents are payable in advance starting January 1, 2019. Required: 1. Assuming this is a sales-type lease for the Diego and a finance lease for the La Jolla, prepare a table summarizing the lease and interest payments suitable for use by either party. 2. Next Level On the assumption that both companies adjust and close books each December 31, prepare journal entries relating to the lease for both companies through December 31, 2020, based on data derived in the table. Assume that La Jolla depreciates similar equipment by the straight line method
Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides for it to lease computers from Appleton Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 5 years. The lease is noncancelable and requires equal rental payments to be made at the end of each year. The computers are not specialized for Sax. 2. The computers have an estimated life of 5 years, a fair value of 300,000, and a zero estimated residual value. 3. Sax agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. The annual payment is set by Appleton at 83,222.92 to earn a rate of return of 12% on its net investment. Sax is aware of this rate. Saxs incremental borrowing rate is 10%. 6. Sax uses the straight-line method to record depreciation on similar equipment. Required: 1. Next Level Examine and evaluate each capitalization criteria and determine what type of lease this is for Sax. 2. Calculate the amount of the asset and liability of Sax at the inception of the lease (round to the nearest dollar). 3. Prepare a table summarizing the lease payments and interest expense. 4. Prepare journal entries for Sax for the years 2019 and 2020.
Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. However, assume that Garvey is now required to make the 65,949.37 payments on January 1 each year and that the fair value at the lease inception is now 275,000 (65,949:37 4:169865).
Sales-Type Lease with Unguaranteed Residual Value Lessor Company and Lessee Company enter into a 5-year, noncancelable, sales-type lease on January 1, 2019, for equipment that cost Lessor 375,000 (useful life is 5 years). The fair value of the equipment is 400,000. Lessor expects a 12% return on the cost of the asset over the 5-year period of the lease. The equipment will have an estimated unguaranteed residual value of 20,000 at the end of the fifth year of the lease. The lease provisions require 5 equal annual amounts, payable each January 1, beginning with January 1, 2019. Lessee pays all executory costs directly to a third party. The equipment reverts to the lessor at the termination of the lease. Assume there are no initial direct costs, and the lessor expects to be able to collect all lease payments. Required: 1. Show how Lessor should compute the annual rental amounts. 2. Prepare a table summarizing the lease and interest receipts that would be suitable for Lessor. 3. Prepare a table showing the accretion of the unguaranteed residual asset. 4. Prepare the journal entries for Lessor for the years 2019, 2020, and 2021.
Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease on January 1, 2019, for nonspecialized equipment that cost the Landlord 280,000 (useful life is 6 years with no residual value). The fair value of the equipment is 300,000. The interest rate implicit in the lease is 14%. The 6-year lease requires 6 equal annual amounts payable each January 1, beginning with January 1, 2019. Tenant pays all executory costs directly to a third party on December 1 of each year. The equipment reverts to the lessor at the termination of the lease. Assume that there are no initial direct costs. Landlord expects to collect all rental payments. Required: 1. Next Level (a) Show how landlord should compute the annual rental amounts, (b) Discuss how the Tenant Company should compute the present value of the lease payments. What additional information would be required to make this computation? 2. Next Level Prepare a table summarizing the lease and interest receipts that would be suitable for Landlord. Under what conditions would this table be suitable for Tenant? 3. Assuming that the table prepared in Requirement 2 is suitable for both the lessee and the lessor, prepare the journal entries for both firms for the years 2019 and 2020. Use the straight-line depreciation method for the leased equipment. The executory costs paid by the lessee are in 2019: insurance, 700 and property taxes, 800; in 2020: insurance, 600 and property taxes, 750. 4. Next Level Show the items and amounts that would be reported on the comparative 2019 and 2020 income statements and ending balance sheets for both the lessor and the lessee, using the change in present value approach.