Oriole Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 5 years, with equal annual rental payments of $3,937 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $19,500, a book value to Oriole of $12,500, and a useful life of 6 years. 4. At the end of the lease term, Oriole and Walsh expect there to be an unguaranteed residual value of $3,125. 5. Oriole wants to earn a return of 7% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. Click here to view factor tables. (b) Using the original facts of the lease, show the journal entries to be made by both Oriole and Walsh in 2020. (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. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Oriole Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 5 years, with equal annual rental payments of $3,937 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $19,500, a book value to Oriole of $12,500, and a useful life of 6 years. 4. At the end of the lease term, Oriole and Walsh expect there to be an unguaranteed residual value of $3,125. 5. Oriole wants to earn a return of 7% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. Click here to view factor tables. (b) Using the original facts of the lease, show the journal entries to be made by both Oriole and Walsh in 2020. (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. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
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 1P: Determining Type of Lease and Subsequent Accounting On January 1, 2019, Ballieu Company leases...
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Oriole Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement.
| 1. | The lease term is 5 years, with equal annual rental payments of $3,937 at the beginning of each year. | |
| 2. | Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. | |
| 3. | The building has a fair value of $19,500, a book value to Oriole of $12,500, and a useful life of 6 years. | |
| 4. | At the end of the lease term, Oriole and Walsh expect there to be an unguaranteed residual value of $3,125. | |
| 5. | Oriole wants to earn a return of 7% on the lease, and collectibility of the payments is probable. This rate is known by Walsh. |
Click here to view factor tables.
(b)
Using the original facts of the lease, show the
Oriole Journal Entries
CAN I GET HELP FILLING IN THE PARTS THAT ARE MISSING... PLEASE AND THANK YOU
|
Date
|
Account Titles and Explanation
|
Debit
|
Credit
|
|
|
Lease Receivable
|
|
|
|
|
?
|
|
|
||
|
?
|
|
|
||
|
?
|
|
|
||
|
(To record the lease)
|
||||
|
1/1/20
|
cash
|
3937
|
|
|
|
?
|
|
3937
|
||
|
(To record lease payment)
|
||||
|
?
|
?
|
|
|
|
|
?
|
|
|
Walsh’s Journal Entries
|
Date
|
Account Titles and Explanation
|
Debit
|
Credit
|
|
1/1/20
|
right-of-use asset
|
17272
|
|
|
lease liability
|
|
17272
|
|
|
(To record the lease)
|
|||
|
1/1/20
|
lease liability
|
3937
|
|
|
cash
|
|
3937
|
|
|
(To record lease payment)
|
|||
|
12/31/20
|
interest expense
|
933
|
|
|
?
|
|
933
|
|
|
(To record interest expense)
|
|||
|
12/31/20
|
?
|
3454
|
|
|
right-of-use asset
|
|
3454
|
|
|
(To record amortization of the right-of-use asset)
|
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