Shamrock Corporation manufactures drones. On December 31, 2019, it leased to Althaus Company a drone that had cost $99,600 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires 5 equal annual rentals of $40,700 payable each December 31, beginning December 31, 2019. An interest rate of 8% is implicit in the lease agreement. Collectibility of the rentals is probable. Prepare Shamrock’s December 31, 2019, journal entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit December 31, 2019 enter an account title To record the lease enter a debit amount enter a credit amount enter an account title To record the lease enter a debit amount enter a credit amount enter an account title To record the lease enter a debit amount enter a credit amount enter an account title To record the lease enter a debit amount enter a credit amount (To record the lease) December 31, 2019 enter an account title To record receipt of lease payment enter a debit amount enter a credit amount enter an account title To record receipt of lease payment enter a debit amount enter a credit

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 12P: Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease...
icon
Related questions
Question

Shamrock Corporation manufactures drones. On December 31, 2019, it leased to Althaus Company a drone that had cost $99,600 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires 5 equal annual rentals of $40,700 payable each December 31, beginning December 31, 2019. An interest rate of 8% is implicit in the lease agreement. Collectibility of the rentals is probable.

Prepare Shamrock’s December 31, 2019, journal entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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.)

Click here to view factor tables.

Date
Account Titles and Explanation
Debit
Credit
December 31, 2019
enter an account title To record the lease
enter a debit amount
enter a credit amount
 
enter an account title To record the lease
enter a debit amount
enter a credit amount
 
enter an account title To record the lease
enter a debit amount
enter a credit amount
 
enter an account title To record the lease
enter a debit amount
enter a credit amount
 
(To record the lease)
   
December 31, 2019
enter an account title To record receipt of lease payment
enter a debit amount
enter a credit amount
 
enter an account title To record receipt of lease payment
enter a debit amount
enter a credit amount
 
(To record receipt of lease payment)
 
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Lease accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage