Windsor Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following information relates to this agreement. 1. 2. 3. 4. 5. Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease payments, and the recognition of revenue. Assume the lessor's annual accounting period ends on December 31, and it does not use reversing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date 20 0 /20 The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. The cost of the asset to the lessor is $230,000. The fair value of the asset at January 1, 2020, is $230,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $24,339, none of which is guaranteed. The agreement requires equal annual rental payments, beginning on January 1, 2020. Collectibility of the lease payments by Windsor is probable. + + Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Leased Equipment (To record the lease) Cash Lease Receivable (To record the receipt of lease payment) Cash Debit 230000 217670 47268 21928 Credit 217670 230000 11 47268
Windsor Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following information relates to this agreement. 1. 2. 3. 4. 5. Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease payments, and the recognition of revenue. Assume the lessor's annual accounting period ends on December 31, and it does not use reversing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date 20 0 /20 The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. The cost of the asset to the lessor is $230,000. The fair value of the asset at January 1, 2020, is $230,000. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $24,339, none of which is guaranteed. The agreement requires equal annual rental payments, beginning on January 1, 2020. Collectibility of the lease payments by Windsor is probable. + + Account Titles and Explanation Lease Receivable Cost of Goods Sold Sales Revenue Leased Equipment (To record the lease) Cash Lease Receivable (To record the receipt of lease payment) Cash Debit 230000 217670 47268 21928 Credit 217670 230000 11 47268
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 3E: Lessee Accounting Issues Sax Company signs a lease agreement dated January 1, 2019, that provides...
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Transcribed Image Text:Windsor Leasing Company signs an agreement on January 1, 2020, to lease equipment to Cole Company. The following
information relates to this agreement.
1.
2.
3.
4.
5.
Prepare all of the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of lease
payments, and the recognition of revenue. Assume the lessor's annual accounting period ends on December 31, and it does
not use reversing entries. (Credit account titles are automatically inden when amount is entered. Do not ind
manually. Record journal entries in the order presented in the problem.)
Date
20
0
/20
The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of
6 years.
The cost of the asset to the lessor is $230,000. The fair value of the asset at January 1, 2020, is $230,000.
The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value
of $24,339, none of which is guaranteed.
The agreement requires equal annual rental payments, beginning on January 1, 2020.
Collectibility of the lease payments by Windsor is probable.
◆
+
Account Titles and Explanation
Lease Receivable
Cost of Goods Sold
Sales Revenue
Leased Equipment
(To record the lease)
Cash
Lease Receivable
(To record the receipt of lease payment)
Cash
Interest Revenue
Debit
230000
217670
47268
DOD
21928
Credit
217670
230000
47268
21928
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