Smith, the lessee, signs an 8-year lease agreement of a floor of a building on December 31, 2020, that requires annual payments of $70,000, beginning immediately. The residual value is guaranteed to the lessor of $50,000 at the end of the lease term. Smith estimates that the residual will have a value of $30,000 at the end of the lease term. Smith is aware of the lessor's implicit rate of interest of 7%. Record Smith's journal entries on December 31, 2020, assuming that the lease is properly classified as a finance lease. • Note: Round your answers to the nearest whole dollar. Date Account Name Dec. 31, 2020 Dec. 31, 2020 To record asset and liability Dr. Cr. Answer Answer Answer Answer Answer Answer

Smith, the lessee, signs an 8-year lease agreement of a floor of a building on December 31, 2020, that requires annual payments of $70,000, beginning immediately. The residual value is guaranteed to the lessor of $50,000 at the end of the lease term. Smith estimates that the residual will have a value of $30,000 at the end of the lease term. Smith is aware of the lessor's implicit rate of interest of 7%. Record Smith's journal entries on December 31, 2020, assuming that the lease is properly classified as a finance lease. • Note: Round your answers to the nearest whole dollar. Date Account Name Dec. 31, 2020 Dec. 31, 2020 To record asset and liability Dr. Cr. Answer Answer Answer Answer Answer Answer

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 9RE: Use the information in RE20-3. Prepare the journal entries that Richie Company (the lessor) would...

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Use the information in RE20-3. Prepare the journal entries that Garvey Company would make in the first year of the lease assuming the lease is classified as a finance lease. Assume that Garvey is required to make payments on December 31 each year.
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