Question

You are the new controller for Banana, Inc.. The company CFO has asked you to develop...

You are the new controller for Banana, Inc.. The company CFO has asked you to develop the appropriate worksheets and then journal entries to support several lease contracts as applied based on the new lease regulations. Your accounting group provided you the following information regarding the lease:

On January 2, 2019, Banana’s subsidiary, Cream, entered into an equipment lease for four years, with semi-annual payments, for a machine that had an eight (8) year life and a fair value of $420,000. The payments were $29,500 each starting January 2, 2019, and continuing each June 30 and December 31. The lessor’s implicit interest rate was 8%. Provide the amortization table for the lease and the journal entries required at the inception of the lease and the lease payment on June 30, 2020. The lessee records amortization expense each time a lease payment is made.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. Amortization schedule.

Lease Amortiztion Schedule

No/Yr

 Date Payment Interest Principal Balance
1:01 January 2,2019 $                             -   $                                  -   $                  -   $ (136,743.00)
1:01 January 2,2019 $             29,500.00 $                                  -   $   29,500.00 $ (107,243.00)
2:01 June 30,2019 $             29,500.00 $                   15,793.56 $   13,706.44 $   (93,536.56)
2019 Totals: December 31,2019 $             59,000.00 $                   15,793.56 $   43,206.44
3:02 January 2,2020 $             29,500.00 $                   15,406.67 $   14,093.33 $   (79,443.23)
4:02 June 30,2020 $             29,500.00 $                   14,588.61 $   14,911.39 $   (64,531.84)
2020 Totals: December 31,2020 $             59,000.00 $                   29,995.28 $   29,004.72
5:03 January 2,2021 $             29,500.00 $                   14,220.70 $   15,279.30 $   (49,252.54)
6:03 June 30,2021 $             29,500.00 $                   13,374.27 $   16,125.73 $   (33,126.81)
2021 Totals: December 31,2021 $             59,000.00 $                   27,594.97 $   31,405.03
7:04 January 2,2022 $             29,500.00 $                   12,936.58 $   16,563.42 $   (16,563.39)
8:04 June 30,2022 $             29,500.00 $                   12,936.58 $   16,563.42 $                     -  
2022 Totals: December 31,2022 $             59,000.00 $                   25,873.16 $   33,126.84

2. Journal entry at inception

Date Particulars Debit Credit
January 2,2019 Leased asset $           136,743.00
      Lease Payable $                 136,743.00

3. Journal entry for lease payment on June 30, 2020

Date Particulars Debit Credit
June 30,2020 Interest $             14,588.61
Lease Payble $             64,531.84
    Cash/Bank $                   79,120.45
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021....
Technoid Inc. sells computer systems. Technoid leases computers to Lone Star Company on January 1, 2021. The manufacturing cost of the computers was $12 million. This noncancelable lease had the following terms: Lease payments: ????????? semiannually; first payment at January 1, 2021 ; remaining payments at June 30 and December 31 each year through June 30, 2025. Lease term: five years (10 semiannual payments). residual value $500,000; And the lessee guaranteed a residual value of $600,000 Economic life of equipment:...
Company A leased new equipment from Lessor Corp. on January 1, 2017, for a period of...
Company A leased new equipment from Lessor Corp. on January 1, 2017, for a period of three years. Lease payments of $100,000 are due to Lessor Corp. each year with the first payment due on January 1, 2017. The annual lease payment includes $2,000 per year designated to cover maintenance costs associated with the equipment. The lease contains no purchase or renewal options and the equipment reverts to Lessor Corp. on the expiration of the lease. The remaining useful life...
The following facts are for a non-cancellable lease agreement between Alpha Corporation and Beta Corporation, a...
The following facts are for a non-cancellable lease agreement between Alpha Corporation and Beta Corporation, a lessee: Inception Date July 1, 2018 Annual lease payment due at the beginning of each year, starting July 1, 2018 $20,066.26 Purchase option price at end of lease term reasonably certain to be exercised by Beta $4,500.00 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $60,000.00 Fair value of asset at July 1, 2018 $88,000.00 Lessor’s implicit rate 9%...
On January 1, 2019, Joey Co. leased a color copier from Legoria Corp. The color copier...
On January 1, 2019, Joey Co. leased a color copier from Legoria Corp. The color copier had a fair market value of $479,079. The lease agreement specifies annual payments beginning January 1, 2019, the inception of the lease, in the amount of $92,931. The lease term is 6 years and the economic life of the color copier is 7 years. At the end of the 6-year lease term, the Color copier is expected to have a residual value of $60,000,...
The following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company,...
The following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Inception date: May 1, 2017 Annual lease payment due at the beginning of    each year, beginning with May 1, 2014 $20,471.94 Bargain-purchase option price at end of lease term $4000.00 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $65,000.00 Fair value of asset at May 1, 2017 $91,000.00 Lessor’s implicit rate 8 % Lessee’s incremental borrowing rate...
Part 1 As the controller of Lynbrook, Inc., you were asked to evaluate a potential bond...
Part 1 As the controller of Lynbrook, Inc., you were asked to evaluate a potential bond issuance to raise funds to expend the company’s operations. Lynbrook is considering issuing a $10 million 5- year, 12 percent bonds payable on June 30, 2020. Interest would be payable semiannually on December 31 and June 30. Bond discounts and premiums would be amortized at each interest payment date using the straight-line method. The company's fiscal year ends at December 31. Requirement: A. Prepare...
On January 1, 2017, Salvatore Inc. leased several machines from Robert, LLP under a 1 year...
On January 1, 2017, Salvatore Inc. leased several machines from Robert, LLP under a 1 year operating lease agreement. The lease calls for semiannual payments of $15,000 each, payable on June 30 and December 31 of each year. The machines were acquired by Robert at a cost of $90,000 and are expected to have a useful life of five years with no expected residual value. Prepare the appropriate journal entries for the lessee from the inception of the lease through...
The following facts are for a non-cancellable lease agreement between Crane Corporation and Russell Corporation, a...
The following facts are for a non-cancellable lease agreement between Crane Corporation and Russell Corporation, a lessee: Inception date July 1, 2020 Annual lease payment due at the beginning of each year, starting July 1, 2020 $ 20,502.59 Bargain purchase option price at end of lease term reasonably certain to be exercised by Russell $ 3,500.00 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $ 42,800.00 Fair value of asset at July 1, 2020 $...
Recording Finance Lease Journal Entries— Purchase Option Lessee Company enters into a 6-year finance lease of...
Recording Finance Lease Journal Entries— Purchase Option Lessee Company enters into a 6-year finance lease of non-specialized equipment with Lessor Company on January 1, 2020. Lessee has agreed to pay $28,000 annually beginning immediately on January 1, 2020. The lease includes an option for the lessee to purchase the equipment at $3,000, which is $2,000 below the estimated fair value at lease end. Lessee Company is reasonably certain that it will exercise the purchase option. The economic life of the...
The following facts pertain to a noncancelable lease agreement between Bonita Leasing Company and Windsor Company,...
The following facts pertain to a noncancelable lease agreement between Bonita Leasing Company and Windsor Company, a lessee. Inception date: May 1, 2017 Annual lease payment due at the beginning of    each year, beginning with May 1, 2017 $19,373.99 Bargain-purchase option price at end of lease term $4,400 Lease term 5 years Economic life of leased equipment 10 years Lessor’s cost $62,000 Fair value of asset at May 1, 2017 $85,000 Lessor’s implicit rate 9 % Lessee’s incremental borrowing rate...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT