Prepare a table summarizing the lease receipts and interest income earned by the Ravis Rent-A-Car for the 4-year lease term.

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 10P
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Ravis Rent-A-Car Company leases a car to Ira Reem, an employee, on January 1, 2019. The term of the noncancelable lease is 4 years. The following information about the lease is provided:

1.

Title to the car passes to Ira on the termination of the lease with no additional payment required by the lessee.
2. The cost and fair value of the car is $8,400. The car has an economic life of 5 years.
3. The interest rate implicit in the lease is 10%.
4. It is probable that Ravis will collect the lease payments.
5. Equal annual lease payments are due at the end of each year.

 

Prepare a table summarizing the lease receipts and interest income earned by the Ravis Rent-A-Car for the 4-year lease term.
Additional Instructions
 
Ravis Rent-A-Car Company
Summary of Lease Payments Received and Interest Income Earned (by Interest Method)
1
Date
Annual Lease Payments Received
Interest Income at 10% on Lease Receivable
Reduction of Lease Receivable
Lease Receivable
2
January 1, 2019
 
 
 
 
3
December 31, 2019
 
 
 
 
4
December 31, 2020
 
 
 
 
5
December 31, 2021
 
 
 
 
6
December 31, 2022
 
 
 
 
 
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