On December 31, 2024, Windsor Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Windsor to make annual payments of $9,353 at the beginning of each year, starting December 31, 2024. The machine has an estimated useful life of 6 years and a $4,800 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Windsor uses the straight-line method of depreciation for all of its plant assets. Windsor's incremental borrowing rate is 9%, and the lessor's implicit rate is unknown. (c) Prepare all necessary journal entries for Windsor for this lease through December 31, 2025. (List all debit entries before credit entries. Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.) Date 1/24 Your answer is partially correct. 1/24 < Account Titles and Explanation Leased Equipment Lease Liability (To record the lease) Depreciation Expense Accumulated Depreciation-Leased Equipment Debit 36757.23 7351.45 Credit 36757.21 7351.45
On December 31, 2024, Windsor Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Windsor to make annual payments of $9,353 at the beginning of each year, starting December 31, 2024. The machine has an estimated useful life of 6 years and a $4,800 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Windsor uses the straight-line method of depreciation for all of its plant assets. Windsor's incremental borrowing rate is 9%, and the lessor's implicit rate is unknown. (c) Prepare all necessary journal entries for Windsor for this lease through December 31, 2025. (List all debit entries before credit entries. Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places e.g. 5,275.) Date 1/24 Your answer is partially correct. 1/24 < Account Titles and Explanation Leased Equipment Lease Liability (To record the lease) Depreciation Expense Accumulated Depreciation-Leased Equipment Debit 36757.23 7351.45 Credit 36757.21 7351.45
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 1E: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a...
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A 94.
Transcribed Image Text:On December 31, 2024, Windsor Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for
Windsor to make annual payments of $9,353 at the beginning of each year, starting December 31, 2024. The machine has an
estimated useful life of 6 years and a $4,800 unguaranteed residual value. The machine reverts back to the lessor at the end of the
lease term. Windsor uses the straight-line method of depreciation for all of its plant assets. Windsor's incremental borrowing rate
is 9%, and the lessor's implicit rate is unknown.
(c)
- Your answer is partially correct.
Prepare all necessary journal entries for Windsor for this lease through December 31, 2025. (List all debit entries before credit
entries. Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is
entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers
to O decimal places e.g. 5,275.)
Date
1/24
1/24
1/25
31/25
Account Titles and Explanation
Leased Equipment
Lease Liability
(To record the lease)
Depreciation Expense
Accumulated Depreciation-Leased Equipment
(To record first lease payment)
Interest Expense
Interest Payable
(To record amortization of the right-of-use asset)
Lease Llability
Interest Payable
cash
(To record lease payment)
Debit
36757.23
7351.45
100 000
4111
5252
4111
Credit
36757.23
7351.45
4111
935:
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