Larkspur Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Crane Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement: 1. Crane has the option to purchase the equipment for $21,000 upon termination of the lease. It is not reasonably certain that Crane will exercise this option. 2. The equipment has a cost of $220,000 and fair value of $259,000 to Larkspur Leasing. The useful economic life is 2 years, with a residual value of $21,000. 3. Larkspur Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Larkspur Leasing is probable. Prepare the journal entries on the books of Larkspur Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.) Enter Date Enter Account Titles and Explanation Debit Credit 1- enter an account title enter a debit amount enter a credit amount 2- enter an account title enter a credit amount 3- enter an account title enter a debit amount enter a credit amount 4- enter an account title enter a debit amount enter a credit amount 1- enter an account title enter a debit amount enter a credit amount 2- enter an account title enter a debit amount enter a credit amount 3- enter an account title enter a debit amount enter a credit amount 1- enter an account title enter a debit amount enter a credit amount 2- enter an account title enter a debit amount enter a credit amount 3- enter an account title enter a debit amount enter a credit amount Assuming that Crane exercises its option to purchase the equipment on December 31, 2021, prepare the journal entry to record the sale on Larkspur Leasing’s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 12/31/21 enter an account title for the journal entry on December 31 2021 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 2021

Larkspur Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Crane Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement: 1. Crane has the option to purchase the equipment for $21,000 upon termination of the lease. It is not reasonably certain that Crane will exercise this option. 2. The equipment has a cost of $220,000 and fair value of $259,000 to Larkspur Leasing. The useful economic life is 2 years, with a residual value of $21,000. 3. Larkspur Leasing desires to earn a return of 5% on its investment. 4. Collectibility of the payments by Larkspur Leasing is probable. Prepare the journal entries on the books of Larkspur Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.) Enter Date Enter Account Titles and Explanation Debit Credit 1- enter an account title enter a debit amount enter a credit amount 2- enter an account title enter a credit amount 3- enter an account title enter a debit amount enter a credit amount 4- enter an account title enter a debit amount enter a credit amount 1- enter an account title enter a debit amount enter a credit amount 2- enter an account title enter a debit amount enter a credit amount 3- enter an account title enter a debit amount enter a credit amount 1- enter an account title enter a debit amount enter a credit amount 2- enter an account title enter a debit amount enter a credit amount 3- enter an account title enter a debit amount enter a credit amount Assuming that Crane exercises its option to purchase the equipment on December 31, 2021, prepare the journal entry to record the sale on Larkspur Leasing’s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 12/31/21 enter an account title for the journal entry on December 31 2021 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 2021

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 6E: Lessor Accounting Issues Ramsey Company leases heavy equipment to Terrell Inc. on March 1, 2019, on...

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1.		Crane has the option to purchase the equipment for $21,000 upon termination of the lease. It is not reasonably certain that Crane will exercise this option.
2.		The equipment has a cost of $220,000 and fair value of $259,000 to Larkspur Leasing. The useful economic life is 2 years, with a residual value of $21,000.
3.		Larkspur Leasing desires to earn a return of 5% on its investment.
4.		Collectibility of the payments by Larkspur Leasing is probable.

Prepare the journal entries on the books of Larkspur Leasing to reflect the payments received under the lease and to recognize income for the years 2020 and 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.)

Enter Date	Enter Account Titles and Explanation	Debit	Credit
1-	enter an account title	enter a debit amount	enter a credit amount
2-	enter an account title		enter a credit amount
3-	enter an account title	enter a debit amount	enter a credit amount
4-	enter an account title	enter a debit amount	enter a credit amount

1-	enter an account title	enter a debit amount	enter a credit amount
2-	enter an account title	enter a debit amount	enter a credit amount
3-	enter an account title	enter a debit amount	enter a credit amount

1-	enter an account title	enter a debit amount	enter a credit amount
2-	enter an account title	enter a debit amount	enter a credit amount
3-	enter an account title	enter a debit amount	enter a credit amount

Assuming that Crane exercises its option to purchase the equipment on December 31, 2021, prepare the journal entry to record the sale on Larkspur Leasing’s books. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
12/31/21	enter an account title for the journal entry on December 31 2021	enter a debit amount	enter a credit amount
	enter an account title for the journal entry on December 31 2021	enter a debit amount	enter a credit amount

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