On January 1, 2022, Jessie Company signed a 5-year operating lease for office space at P3,600,000 per year. The lease included a provision for additional rent of 10% of annual company sales in excess of P6,000,000. Jessie's sales for the year ended December 31, 2022 were P10,000,000. Upon execution of the lease, Jessie paid P500,000 as a bonus for the lease. Jessie's rent expense for the year ended December 31, 2022 is O A P3,600,000 O B P4,100,000 O C P4,000,000 D P3,700,000
Q: Wildhorse Corporation, a manufacturer of ethnic foods, contracted in 2020 to purchase 570 pounds of…
A: The price of the inventory has been increased by $0.28 per pound but as per the US GAAP, inventory…
Q: the answers to the four questions at the bottom under the statement table. Oakdale Fashions,…
A: The Current Corporate tax rate is 21%. Generally corporate taxes are fixed rate irrespective of the…
Q: B Company provided the balance sheet below: Cash 225 Accounts payable 150 Accounts…
A: Acid test ratio = Quick assets / Current liabilities where, Quick assets = Current assets -…
Q: Refer to the following financial information of Scholz Company: NOPAT 8.250.000.00 EBITDA…
A: Formula: Economic value added (EVA) = Net operating profit after tax - Total invested capital x WACC…
Q: The Human Resources department at Community Hospital instituted a new performance evaluation system…
A: Variance is actually the deviation which a company calculates when the actual results of the…
Q: Harvest Inc. produces and sells a single product. The selling price of the product is $200.00 per…
A: Introduction: Break even units: Break even means the level where there is no profit nor loss to the…
Q: Nathan had a car that he acquired for $45,000 5 years ago. It was stolen in the current tax year,…
A: given Nathan had a car that he acquired for $45,000 5 years ago. It was stolen in the current tax…
Q: lighting $7,550; signs, $1,680. List the items and amounts that should be incl
A: In this question, we have to find out the items that are suitable for the land account to find out…
Q: Given the price-earnings ratio of 12, EPS of P2.18 and payout ratio of 75%, compute for the dividend…
A: "We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: f money is worth 5% compounded annually, what payment 10 years from now is equivalent to a payment…
A: This is a question of compound interest Compound interest (or compounding interest) is the interest…
Q: 3. Management at The Daily Grind wants to install an espresso bar in its restaurant that a. Costs…
A: Payback period is one of the measure of capital budgeting. This shows in many years, initial…
Q: Do my ans. In 45 minutes otherwise I will give you downvote
A:
Q: A company's sales last year were $615,000 and its net income was $45,800. It has $465,000 in assets…
A: Ratio analysis means where the various ratio can be found out with different name and meaning and…
Q: North Company designs and manufactures machines that facilitate DNA sequencing. Depending on the…
A: Introduction Activity based costing approach is used to assign factory overheads to the product by…
Q: Why do entrepreneurs need to begin from the users’ or customers’ hidden needs when they are about to…
A: The entrepreneurs wants to start the business and the business which has been started by the…
Q: During the current year, Sokowski Manufacturing earned income of $327,600 from total sales of…
A: Sales margin means profit earned from the revenue generated from the sale of the goods or services.…
Q: .) Net income for 2020 was P1,825,600. In 2021, it decreased by 53%. Still using the 2020 net income…
A: The net income of the company can be calculated by deducting all the expenses and costs from revenue…
Q: ion Corporation was organized and n elects to expense its organizatic
A: Organization costs refer to the expense that arises while forming a business entity.
Q: Q4 - Which of the following is a method of accounting for Bad Debts? a. Percentage of Sales Method…
A: Bad debts are those kinds of customers that become uncollectible. These are charged in the income…
Q: Project Y requires a $345,000 investment for new machinery with a six-year life and no salvage…
A: Net present value : It is the discounted value of future cash inflow. It is determined by…
Q: Problem 3: A certain machine costs P 40,000, has a life of 4 years and salvage value of P 5,000. The…
A: Formula: Depreciation per unit = ( Asset cost - Salvage value ) / Total estimated Units. Deduction…
Q: A company had the following purchases during its first year of operations: Purchases Sales January 6…
A: Introduction Cost of goods available for sales are those goods which are purchased or manufactured…
Q: The following information was presented by User-Friendly Industries Company for an asset purchased…
A: Return on investment (ROI) = Annual Operating profit / Beginning net book value of the assets where,…
Q: Which of the pairings below related to measurement focus and basis of accounting is correct for the…
A: Solution Nonprofit entities measurement focus is economic resources. Nonprofit entities missions…
Q: Fischer, Inc.'s trial balance contains the following balances: Cash $371 Accounts Payable $268…
A: Introduction: Trial Balance: All the final ledger accounts balances are posted in Trial balance to…
Q: 43 The trial balance for Greenway Corporation appears as follows Greenway Corporation Trial Balance…
A: Adjusting entries are prepared by management to ensure the accrual basis accounting system. These…
Q: B-1 Organic Food Company (*B-1") engages in the business of selling organic food on-line. The…
A: Journal entries: These are the entries prepared to record the business transactions in the books of…
Q: An entity reported the following information for the year ended December 31, 2020: Sales 7,750,000…
A: The total amount of money generated by an individual or firm in a certain period of time, minus…
Q: Extreme Sports sells logo sports merchandise. The company is contemplating whether or not to…
A: Variable costs are costs which changes with change in activity level. Fixed costs are costs which do…
Q: MediSecure, Incorporated, uses the FIFO method in its process costing system. It produces clear…
A: First In, First Out: First in, first out (also known as FIFO) is an asset-management and valuation…
Q: Gabrielle has the following gains and losses for the current year: Short-term capital loss $(8,000)…
A: Given: - Short-term capital loss=$8,000 Long-term capital gain=$5,000
Q: 1. Which of the following can be accepted as main points to note when it comes to a company's…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Which of th
A: This is a multiple-choice question in which we have to select the correct option
Q: Problem 1: The initial cost of a paint sand mill, including its installation is P 800,000. The…
A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…
Q: 1. Basic earnings per share 2. Diluted earnings per share
A: Basic earnings per share is the earnings per share which a company has earned and is actually the…
Q: B Company provided the balance sheet below: Accounts Cash 225 150 payable Accounts receivable 600…
A: Formulas: Acid test ratio = Quick assets / Current liabilities where, Quick assets = Current assets…
Q: s digital cameras for drones. Their basic digital camera uses $80 im the camera further to enhance…
A: The operational earnings refer to the sum value of profits that a company gains by deducting its…
Q: 17. LO.2 (WA EUP) For each of the following situations, use the weighted average method to determine…
A: Hi student Since there are multiple subparts, we will answer only first three subparts.
Q: 2. A rocket launches upwards with initial velocity 50.0 m/s and constant acceleration of 2.0m/s²…
A: a). After the engine stops, the motion of the rocket can be considered as the motion of the freely…
Q: True or false ________ 10. Depreciation is charged on all company’s assets. ________ 11.…
A: Depreciation is the normal wear and tear to a fixed asset that happens over a period of time through…
Q: ASSIMILATION You and your two friends have put up a small editorial service company. As the only…
A: Trial balance means the statement prepared from ledger account where all debit and credit balance…
Q: Independence Co. budgeted $576,760 manufacturing direct wages, 2,554 direct labor hours and had the…
A: Activity based costing is one of the cost accounting system, under which all indirect costs and…
Q: Katie's brother died in March 2020, and as a result, at that time, she inherited the following…
A: GIVEN Katie's brother died in March 2020, and as a result, at that time, she inherited the…
Q: Use the information below for questions 21-22 net income of $300,000. total assets of $1,500,000.…
A: Return on Total Assets: The return on total assets ratio reveals how successfully a company's…
Q: Assuming, the taxpayer is a domestic corporation, how much is the regular corporate income tax?
A: Calculating the taxable income of a Domestic tax payer Particulars Amount…
Q: Taylor Company has the following balances at the end of the current year: Total Assets $490,000…
A: Formulas: Debt to equity ratio = Total liabilities / Equity where, Equity = Total Assets - Total…
Q: Accounts receivable turnover and days' sales in receivables OBJ.8 The Campbell Soup Company…
A: Accounts Receivables Turonver Ratio is calculated with the help of following formula Account…
Q: Could you explain the relationship between money, credit, and financial firms? Explain
A: A financial institution (FI) is a firm that deals with financial and monetary transactions such…
Q: The Company provided the following financial information: Assets 7,250,800.00 Tax rate 35% ВЕР 14%…
A: Times-interest-earned ratio : = Earnings before interest, taxes, Depreciation & Amortization…
Q: NOPAT 8250000 EBITDA 17725000 Net Income 5050000 Capital Expenditures 6820000 After tax capital…
A: Formula: Economic value added (EVA) = Net operating profit after tax - Total invested capital x WACC…
Step by step
Solved in 2 steps
- On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 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.)
- 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.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.Determining 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.
- 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.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.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?
- 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 methodUse 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).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.