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