On August 31, 2018, Simmons Inc. leased warehouse equipmer lease agreement calls for Simmons to make semiannual lease pa lease term, payable at August 31 and February 28, with the first. Simmons' incremental borrowing rate is 11%, the same rate Co payment amounts. Covington purchased the warehouse equipm August 31, 2018 with an expected useful life of 10 years and no for both Simmons and Covington ends on December 31. Required: What are the present value of the lease payments on August 31,
Q: Below are three independent and unrelated errors. On December 31, 2020, Wolfe-Bache Corporation…
A: The income statement shows the net income or net loss that is calculated by deducting the expenses…
Q: Empl Hrs OT Rate Gross FIT FICA 0010 40 5 $12 $570 $57 $43.61 $15 $5 0011 40 0 $16 $640 $64 $48.96…
A: Federal Insurance Contributions Act: The Federal Insurance Contributions Act is a United States…
Q: ABC Co. distributes annual bonus to its sales manager. The company reported 2 million profit for…
A: The net profit after tax is calculated as difference between net income and income tax.
Q: Payroll Advertising Raw Materials Rent Insurance Utilities Services A. 30% C. 1% $403,120 Use the…
A: Contribution for utilities will be equal to utilities expense divided by total expense
Q: Raymond Ryans purchased a 50-year-old flat in Melbourne on 15 September 2010 for $350,000 which he…
A: Date of Purchase 15/09/2010 at $350000 Date of sale 15/03/2020 at $510000 Capital gain on sale :…
Q: project cost 1.100,000 has a life of 10years,has no salvage value,depriciation is straight-line to…
A:
Q: Raymond Ryans purchased a 50-year-old flat in Melbourne on 15 September 2010 for $350,000 which he…
A:
Q: how is this reposrted in the statement of cash flow using the direct method? conversion if bonds…
A: Answer : Is not shown
Q: What would be the effective rate of protection on bicycles in China if China places a 50 percent…
A: Introduction;- Effective rate of protection on bicycles in China if China places a 50 percent…
Q: A cash priority program would show that the loss absorption potential for Aces would amount to: a…
A: Given in the question: Loan payable to Joker = P10,000 Partner Hearts’ Due to Partnership = P15,000…
Q: Brett and Andy applied for the same credit card from the same bank. The bank checked both of their…
A: Monthly percentage rate = APR / 12 (a) Bret monthly percentage rate = 12.6% / 12 Bret monthly…
Q: The term deficit is used to refer to a debit balance in which of the following accounts of a…
A: Deficit in accounting refers to occur when the expenses incurred during the year are more than the…
Q: Problem 1 At the beginning of current year, Kahel Company had 125,000 shares issued which included…
A: In the context of the given question, we are required to prepare the journal entries. Treasury…
Q: Clyde is a cash-method taxpayer who reports on a calendar-year basis. This year Paylate Corporation…
A: Under Cash method income is not consider until payment is actually received. Cash method is simple…
Q: For Business Plan 500,000-capital 117,705-equipment 1,577,067.40-salary *When making the product 500…
A: Here discuss about the business plan with the details of projection made for the sales and cost of…
Q: Given below are the statements of financial position of H and its subsidiary of S as at 31st…
A: Consolidation is the process of merging the accounts of a subsidiary with the parent entity.…
Q: 53. Tea Tree Ltd has acquired some government bonds on 1 July 2022. The government bonds will…
A: Note: Since you have posted a question with multiple sub-parts, we will solve the first three…
Q: O'Shaughnessy Inc. sells a product for $90 per unit. The variable cost is $65 per unit, while fixed…
A: Introduction: Break even point in units: It tells the level where there is no profit nor loss to the…
Q: Use the information below to calculate the following: - Total stock needs for the month…
A: The inventory is one of the most important assets of the company. the company needs to determine the…
Q: Use the following information to calculate cash received from dividends: $ 71,500 Dividends revenue…
A: The adjustment entries are prepared to adjust the revenue and expenses of the current period.
Q: Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the…
A: Ledger is the second step of Accounting after Journal. After Journal Entries are posted in…
Q: Hayday PLC. Trial Balance as at 31st December 2021 is shown below: £s Revenue Administrative…
A:
Q: a)Calculate the deficiency in labour hours for the month. and determine the priority ranking for…
A: Calculate the deficiency in labour hours for the month. and determine the priority ranking for…
Q: Details of a company's first two years of operations are shown: Year 1 Year 2…
A: The net income is calculated using various methods as absorption costing, variable costing. Using…
Q: The following entries are in the books of Moh Co. for the month of Jan,2021: 10th Jan Started up the…
A: The process of recording business transactions in the books of accounts for the first time is…
Q: ABC Company, located in La Trinidad, Benguet, sold merchandise to Minda, a customer located in La…
A: Account terms a) FOB shipping point: -Purchaser is responsible for paying the freight charges. Since…
Q: 1-a. Compute the throughput time for each month. 1-b. Compute the delivery cycle time for each…
A: Answer to (1) (1A) Compute the throughput time per month = Process Time + Inspection Time + Move…
Q: For financial reporting, Clinton Poultry Farms has used the declining-balance method of depreciation…
A: A journal entry is the process of recording or maintaining track of any financial or non-financial…
Q: Required: Determine the adjusted balances of the following as of December 31, 2022 1. Inventory 2.…
A: Inventory at 31 December,22 1329000 A. already Sold goods -50000 B. Sales on consignment basis…
Q: What is the present worth of the withdrawal?(kindly give tye given, complete and detailed solution.…
A:
Q: 1. Statement I. If the deposit or advance results from company’s operating activities, the liability…
A: In the context of the given question, we are required to find the correct answer from the available…
Q: Below are the balance sheet items of Arius Cleaning Services for the month ended January 2021.…
A: Liabilities= Assets -owner's equity = RM17000-RM14800= RM 2200
Q: Paul Company presented the following information pertaining to its investments in equity securities.…
A: Investment in equity securities can be designated in either way: 1. FVPL 2. FVOCI
Q: View Policies Current Attempt in Progress Very high turnovers O are always the goal of management.…
A: Turnover ratios are the efficiency ratios which helps in determining the effect of balance sheet…
Q: Watts and Lyon are forming a partnership. Watts invests $40,500 and Lyon invests $49,500. The…
A: The partners can share profits and losses on various parameters as decided in the agreement. For…
Q: Half of Remaining miles flew in 2005. ● It is expected that the vehicle will sell for Rs 17,500 at…
A: Depreciation Expenses There are different method which are opted for the assets of the business. To…
Q: The company's total general company overhead would be unaffected by this decision. Required: 1.…
A: In accounting we have to make decisions like buy or make a particular asset. This includes…
Q: Cash balance per books, September 30 $5,300 Deposits in transit 510 Notes receivable with interest…
A: Adjusted cash balance is the amount that should be in bank account. It makes the balance as per bank…
Q: Clyde is a cash-method taxpayer who reports on a calendar-year basis. This year Paylate Corporation…
A: Gross income is the amount paid before deduction of taxes or other deductions and is inclusive of…
Q: (in $000) June July August A. $15,000 C. $11,667 Begin. Inv. 70 60 20 Purchases COGS 30 40 10 50 50…
A: In the context of the given question, we are required to compute the inventory depreciation…
Q: Lantz Company has provided the following information: Cash sales totaled $280,000. Credit sales…
A: Working Notes: Calculation of Gross Profit Gross Profit = Sales – Cost of goods sold Gross Profit =…
Q: In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa…
A: Solution: Under percentage of completion method of revenue recognition for long term construction…
Q: Determine the managerial balance sheet for the FY 2021.
A: Answer
Q: A company reports the following: Net income $133,720 Preferred dividends 12,060 Average…
A: Formula used: Return on Stock holders equity = ( Net income / Average stock holders equity ) x 100
Q: Raymond Ryans purchased a 50-year-old flat in Melbourne on 15 September 2010 for $350,000 which he…
A: Introduction: When you sell an investment portfolio and its value rises, you get a capital gain.…
Q: Bonneau Corporation declares a cash dividend of $100,000 on July 1 for any shareholder on record on…
A: Lets understand the basics. Journal entry is required to record financial event and transaction that…
Q: Hetty died in June 2020 leaving £20,000 to her son George and the £100,000 remainder of her estate…
A: Harold's Harold's Death Small Flat is valued = £170,000 other assets = £680,000 Other Total…
Q: An entity reports the following transactions for the 2021 tax year. The trustee accumulates all…
A: It is the amount payable by the tax payer to the government on his annual earned income. This annual…
Q: D XYZ Company Balance Sheet Assets Liabilities Cash $35,000 Notes $45,000 Wages $56,000 Inventory…
A: Current ratio is the ratio which is used for measuring the company's ability to pay off its current…
Q: Computer Programmer $75/hour Architect $8,000 flat fee Attorney $250/hour Bankers 2% of capital…
A: $1 MM means $1000000. Cost of bank services= $1000000*2% = $…
Step by step
Solved in 2 steps
- 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?Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would make in the first year of the lease assuming the lease is classified as a sales-type lease. Assume that the lessee is required to make payments on December 31 each year. Also assume that Richie had purchased the equipment at a cost of 200,000.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.
- 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).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.Lessee Accounting Issues Timmer Company signs a lease agreement dated January 1, 2019, that provides for it to lease equipment from Landau Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: The lease is noncancelable and has a term of 5 years. The annual rentals are 83,222.92, payable at the end of each year, and provide Landau with a 12% annual rate of return on its net investment. Timmer agrees to pay all executory costs directly to a third party on December 1 of each year. In 2019, these were insurance, 3,760; property taxes, 5,440. In 2020: insurance, 3,100; property taxes, 5,330. There is no renewal or bargain purchase option. Timmer estimates that the equipment has a fair value of 300,000, an economic life of 5 years, and a zero residual value. Timmers incremental borrowing rate is 16%, it knows the rate implicit in the lease, and it uses the straightline method to record depreciation on similar equipment. Required: 1. Calculate the amount of the asset and liability of Timmer at the inception of the lease. (Round to the nearest dollar.) 2. Prepare a table summarizing the lease payments and interest expense. 3. Prepare journal entries on the books of Timmer for 2019 and 2020. 4. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the present value of next years payment approach to classify the finance lease obligation between current and noncurrent. 5. Next Level Prepare a partial balance sheet in regard to the lease for Timmer for December 31, 2019. Use the change in present value approach to classify the finance lease obligation between current and noncurrent.
- 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. 47,910Determining Type of Lease and Subsequent Accounting On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: The lease is noncancelable and has a term of 8 years. The annual rentals arc 35,000, payable at the beginning of each year. The interest rate implicit in the lease is 14%. Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for 1 at the end of the lease term, December 31, 2026. The cost of the equipment to the lessee is 150,000, and the fair value is approximately 185,100. Ballieu incurs no material initial direct costs. It is probable that Ballieu will collect the lease payments. Ballieu estimates that the fair value is expected to be significantly greater than 1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of 35,000 discounted at 14% is 185,090.68 (the 1 purchase option is ignored as immaterial). Required: 1. Next Level Identify the classification of the lease transaction from Ballices point of view. Give the reasons for your classification. 2. Prepare all the journal entries tor Ballieu for the years 2019 and 2020. 3. Discuss the disclosure requirements for the lease transaction in Ballices notes to the financial statements.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.
- 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.Lessor Accounting Issues Ramsey Company leases heavy equipment to Terrell Inc. on March 1, 2019, on the following terms: 1. Twenty-four lease rentals of 2,950 at the beginning of each month are to be paid by Terrell, and the lease is noncancelable. 2. The cost of the heavy equipment to Ramsey was 55,000. 3. Ramsey uses an implicit interest rate of 18% per year and will account for this lease as a sales-type lease. Required: Prepare journal entries for Ramsey (the lessor) to record the lease contract on March 1, 2019, the receipt of the first two lease rentals, and any interest income for March and April 2019. (Round your answers to the nearest dollar.)Sales-Type Lease with Guaranteed Residual Value Calder Company, the lessor, enters into a lease with Darwin Company, the lessee, to provide heavy equipment beginning January 1, 2017. The lease is appropriately classified as a sales-type lease. The lease terms, provisions, and related events are as follows: The lease is noncancelable, has a term of 8 years, and has no renewal or bargain purchase option. The annual rentals are 65,000, payable at the end of each year. The interest rate implicit in the lease is 15%. Darwin agrees to pay all executory costs directly to a third party. The cost of the equipment is 280,000. The fair value of the equipment to Calder is 308,021.03. Calder incurs no material initial direct costs. Calder expects that it will be able to collect all lease payments. Calder estimates that the fair value at the end of the lease term will be 50,000 and that the economic life the equipment is 9 years. This residual value is guaranteed by Darwin. The following present value factors are relevant: PV of an ordinary annuity n = 8, i = 15% = 4.487322 PV n = 8, i = 15% = 0.326902 PV n = 1, i = 15% = 0.869565 Required: 1. Determine the proper classification of the lease. 2. Prepare a table summarizing the lease receipts and interest income earned by Calder for this lease. 3. Prepare journal entries for Calder for the years 2019, 2020, and 2021. 4. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the present value of next years payment approach to classify the lease receivable as current and noncurrent. 5. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the change in present value approach to classify the lease receivable as current and noncurrent.