Blossom Co. as lessee records a finance lease of machinery on January 1, 2021. The seven annual lease payments of $814,000 are made at the end of each year. The present value of the lease payments at 12% is $3,715,000. Blossom uses the effective-interest method of amortization and sum-of-the-years'-digits depreciation (no residual value). prepare an amortization table for 2021 ND 2022
Q: pplicati... WP WileyPLUS B Bloomberg for Edu... Multiple Choice O O During its most recent fiscal…
A: Formula = sales - variable cost = contribution Variable cost = sales - contribution
Q: Which of the following statements is correct? A.The external auditor is responsible for the…
A: Introduction:- Accounting is the art of recording, measuring, classification, presentation and…
Q: Kapoor Corporation uses the following activity rates from its activity-based costing to assign…
A: It is a method used to assign the manufacturing overhead cost to the finished goods. It assign cost…
Q: Bad Burgers recorded food and drink sales of $350,000 for the financial year.The expenses amounted…
A: Introduction: Profit is defined as the financial advantage realized when the income generated by an…
Q: Units Cost Beginning inventory Purchase (April 3) Sale (April 10) Purchase (April 18) Purchase…
A: LIFO is last in first out inventory valuation method which says that inventory which is purchased…
Q: How much is to be shown as wages expense for the year? $30,000 $46,000 $54,000 $70,000
A: Wages which are incurred (accrued) in the current year should be shown as wages expense. Wages…
Q: $6,000
A:
Q: Entries for equity investments: less than 20% ownership On February 22, Triangle Corporation…
A: A Journal entry is a primary entry that records the financial tarnsactions initially. The…
Q: A theoretical measure does of income does not exist in the real world in which accountant must…
A: The theoretically correct measure of the income refers to the firm net income which determined on…
Q: Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the…
A: Variance is the result of the amount of expected value and actual results. It can be calculated by…
Q: question 1 (1a)An increase in the provision for doubtful debts will: A increase the net…
A: Hi student Since there are multiple questions, we will answer only first question. Provision for…
Q: Question 3 The following information has been extracted from the business accounts of Ram for his…
A: Financial statements (FS) are those statements or records which states the financial health (FH) of…
Q: Identify which from the following scenarios depict relevant cash flows in making the decision…
A: While making decision for accepting two alternatives, we always consider relevant cost and relevant…
Q: Using the Exhibit below, assume that the balance of Merchandise Inventory was $170,000 at the…
A: Increase…
Q: Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases…
A: Blank 1- $ 7060 Blank 2- $ 7470 $ $ By balance b/f 410…
Q: You have $400,000.00 saved for retirement. Your account earns 5% interest compounded annually. How…
A: Given Information: Saved $400,0000 for retirement Interest Rate 5% Compounded Annually Duration 15…
Q: POPOL Company manufactures 100,000 units of Part P yearly as a major component for one of its…
A: Assumptions: we are considering fixed cost of 160,000 is unavoidable fixed cost. So this won't be…
Q: urrent accounting practice in Australia is to initially record property,plant and equipment at:…
A: Historical Concept of Accounting : As per this accounting concept the fixed assets are initially…
Q: Use the percentage method to compute the federal income taxes to withhold from the wages or salaries…
A: INTRODUCTION: In India, income tax is a tax levied by the government depending on your earnings (and…
Q: PT. DEF has Accounts Receivable from PT. HIJ amounted Rp 2.500.000. However, this Accounts…
A: Under the direct write off method, accounts receivable are written off with recording the allowance…
Q: The accounting records of Inter Company revealed the following selected costs: Sales commissions,…
A: Product cost are those cost which directly related to production process of a product such as direct…
Q: Marketable securities 759,000 Accounts and notes receivable (net) 310,500 Inventories 643,500…
A: Working capital is the amount of capital needed for daily operations of the business. This is…
Q: Analyze the following: I – Cumulative preference dividends in arrears should be reported as a note…
A: Analysis of Statement 1 :— Cumulative preference dividends in arrears should be reported as a note…
Q: Corporation owns a residential house with a fair market value of $10,000,000 and a carrying amount…
A: Fringe benefits tax refers to the tax levied by the authoritative government over the perks received…
Q: arious options are provided as possible answers to the following questions. Choose the answer and…
A: Equity- Share capital and equity finance are other names for equity capital. It is referred to as…
Q: Analyze the following:
A: Financial statements are the statements of the business, that cover every aspect of the business and…
Q: Leases On January 1, Spider, Inc., entered into two lease contracts. The first lease contract was a…
A: The lease in the books of the lessee is initially recognized by recognizing the right-of-use asset…
Q: Prepare a cash budget per month for the third quarter
A: Cash budget is the budget which is prepared by the company so that it can be estimated about the…
Q: The Statement of Cash Flows is prepared instead of the Retained Earnings Statement. Group of answer…
A: Retained Earnings - Retained Earnings is the statement that shows the profit earned by the company…
Q: An entity provided the following data for the current year: Net Income – P 4,000,000 Ordinary…
A: Basic EPS = net income/ No. of Shares Outstanding = 4000000/250000 = P 16
Q: On January 1, 2015, ML Company grants 100 cash share appreciation rights to each of its 500…
A: As per our guidelines we are supposed to answer only 1 question. so the solution of first question…
Q: Which of the following inventories would a company ordinarily hold for sale? O a. Work in process.
A: Inventory- An essential current asset for a manufacturing company is its inventory. The tangible…
Q: During December, Moulding Corporation incurred ·26,000 of actual Manufacturing Overhead Cost. During…
A: The process of recording business transactions in the books of accounts for the first time is…
Q: Using the Exhibit below, assume that the balance of Accounts Payable was $50,000 at the beginning of…
A: The indirect method for the preparation of the statement of cash flows involve the adjustment of net…
Q: The comparative current liabilities balances for December 31, end of the year, for a company are…
A: Horizontal Analysis - The Statement of Financial Position - The statement of financial position is…
Q: Chris Ronaldo operates a business operator in Porto Listo. The following data was…
A: Purchase of equipment means equipment or other tangible products customer purchase under this…
Q: Carla Vista Co. receives a $60,400, 6-year note bearing interest of 7% (paid annually) from a…
A: We shall calculate the present value of Note by discounting all cash flows during the 6 year period.…
Q: Activity 1 Draw up Kelly's balance sheet as at 30 June 2008 from the following information. $ Office…
A: Accounting equation of the business has three important elements. These are assets, liabilities and…
Q: .Norte De University, a proprietary educational institution, has the following selected information…
A: Given that, Quarterly income tax payments = P48,000 Miscellaneous fees = P1,800,000 Tuition fees =…
Q: what is the total gross profit reported on the job during the month?
A: Allocation Base :— It is basis from which manufacturing Overhead is Allocated to Product.…
Q: B. What is the product unit cost for Cold brew drink, which consist of 500 units and has total…
A: "Since you have asked multiple questions, we will solve first question for you. If you want any…
Q: How arrived Purchase of fixed assets (10,20,000)
A: Fixed assets refers to the items or assets which company plans to use over the long period and it…
Q: Current assets: Cash $655,500 Marketable securities 759,000 Accounts and notes receivable (net)…
A: Introduction: Working capital: Working capital, which is also known as net working capital (NWC), is…
Q: break - even point in sales revenue V) Mr. Jasin expects the company to earn an operating income of…
A: A Break-even point refers to the point where the cost and revenue from the business are equal, it…
Q: How much is the book value per preference share assuming that preference shares are non-cumulative?
A: Book value per share refers to the ratio of total value available for preference shareholder and…
Q: Bara Enterprise manufactures product Alpha. The following information is for the year 2021: [Bara…
A: Sales budget includes units of sales and sale value. Production budget shows the quantity of units…
Q: 64 Analyze the following: I – Any gain on a subsequent increase in the fair value less cost of…
A: Here given the option related with the for True and False which are incurred to the statement which…
Q: Question 9: When a workbook is protected, you can still Answer: A. B. C. D. O delete worksheets O…
A: Here discuss about the details of the data workbook protection in the excel and its uses as well.…
Q: Entry for Uncollectible Accounts Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging…
A: Introduction: In the allowance method of uncollectible accounts, bad debt expenses are recognized…
Q: Current assets: Cash $655,500 Marketable securities 759,000 Accounts and notes receivable (net)…
A: Lets understand the basics. Working capital is a capital required to run a day to day business.…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Prepare all of Blossom's
- 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.Determining Type of Lease and Subsequent Accounting On January 1, 2019, Caswell Company signs a 10-year cancelable (at the option of either party) agreement to lease a storage building from Wake Company. The following information pertains to this lease agreement: 1. The agreement requires rental payments of 100,000 at the beginning of each year. 2. The cost and fair value of the building on January 1, 2019, is 2 million. The storage building has not been specialized for Caswell. 3. The building has an estimated economic life of 50 years, with no residual value. Caswell depreciates similar buildings according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building reverts to the lessor. 5. Caswells incremental borrowing rate is 14% per year. Wake set the annual rental to ensure a 16% rate of return (the loss in service value anticipated for the term of the lease). Caswell knows the implicit interest rate. 6. Executory costs of 7,000 annually, related to taxes on the property, are paid by Caswell directly to the taxing authority on Dec. 31 of each year. Required: 1. Determine what type of lease this is for the lessee. 2. Prepare appropriate journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019 and 2020.
- 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.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.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.)
- Lessee Accounting with Payments Made at Beginning of Year Adden Company signs a lease agreement dated January 1, 2019, that provides for it to lease non-specialized heavy equipment from Scott Rental Company beginning January 1, 2019. The lease terms, provisions, and related events are as follows: 1. The lease term is 4 years. The lease is noncancelable and requires annual rental payments of 20,000 to be paid in advance at the beginning of each year. 2. The cost, and also fair value, of the heavy equipment to Scott at the inception of the lease is 68,036.62. The equipment has an estimated life of 4 years and has a zero estimated residual value at the end of this time. 3. Adden agrees to pay all executory costs directly to a third party. 4. The lease contains no renewal or bargain purchase options. 5. Scotts interest rate implicit in the lease is 12%. Adden is aware of this rate, which is equal to its borrowing rate. 6. Adden uses the straight-line method to record depreciation on similar equipment. 7. Executory costs paid at the end of the year by Adden are: Required: 1. Next Level Determine what type of lease this is for Adden. 2. Prepare a table summarizing the lease payments and interest expense for Adden. 3. Prepare journal entries for Adden for the years 2019 and 2020.On August 1, 2019, Kern Company leased a machine to Day Company for a 6-year period requiring payments of 10,000 at the beginning of each year. The machine cost 40,000 and has a useful life of 8 years with no residual value. Kerns implicit interest rate is 10%, and present value factors are as follows: Present value for an annuity due of 1 at 10% for 6 periods4.791 Present value for an annuity due of 1 at 10% for 8 periods5.868 Kern appropriately recorded the lease as a sales-type lease. At the inception of the lease, the Lease Receivable account balance should be: a. 60,000 b. 58,680 c. 48,000 d. 47,910Owens 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?
- 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.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 methodLessee 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.