Question

BBB Leasing purchased a machine for $250,000 and leased it to Jack Tupp Auto Repair on...

BBB Leasing purchased a machine for $250,000 and leased it to Jack Tupp Auto Repair on January 1, 2018.

Lease description:
Quarterly rental payments $16,315 at beginning of each period
Lease term 5 years (20 quarters)
No residual value; no BPO
Economic life of machine 5 years
Implicit interest rate 12%
Fair value of asset $250,000


What is the balance in the lease payable account after the April 1, 2018, lease payment?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Total lease liability = $250,000

Balance in lease payable account after first lease payment on January 1, 2018 = $250,000 - $16,315 = $233,685

Interest included in the lease payment made on April 1, 2018 = $233,685 x 12% x 1/4 = $7,010.55

Principal amount included in the lease payment made on April 1, 2018 = $16,315 - $7,010.55 = $9,304.45

Therefore,

Balance in lease payable account after April 1, 2018 lease payment = $233,685 - $9,304.45 = $224,380.60

Thus, the correct answer is $224,381 (rounded up).

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
Elf Leasing purchased a machine for $600,000 and leased it to IGA, Inc. on January 1,...
Elf Leasing purchased a machine for $600,000 and leased it to IGA, Inc. on January 1, 2018. Lease description: Quarterly rental payments $31,101 at beginning of each period Lease term 6 years (24 quarters) No residual value; no BPO Economic life of machine 6 years Implicit interest rate and lessee’s incremental borrowing rate 8% Fair value of asset $600,000 Required: Prepare appropriate entries for both IGA and Elf Leasing from the beginning of the lease through the second rental payment...
Scape Corp. manufactures telephony equipment. Scape leased equipment to User, Inc. on January 1, 2018. Scape...
Scape Corp. manufactures telephony equipment. Scape leased equipment to User, Inc. on January 1, 2018. Scape produced the equipment at a cost of $5,100,000. Lease description: Quarterly rental payments $464,353 at beginning of each period Lease term 6 years (24 quarters) No residual value; no BPO Economic life of equipment 6 years Implicit interest rate and lessee’s incremental borrowing rate 12% Fair value of asset $8,100,000 Required: Prepare appropriate entries for both User and Scape from the beginning of the...
Candy Salons Leasing leased electronic equipment to Georgia-Atlantic on January 1, 2021. Candy Salons Leasing purchased...
Candy Salons Leasing leased electronic equipment to Georgia-Atlantic on January 1, 2021. Candy Salons Leasing purchased the equipment from International Machines at a cost of $153,255. Here is the related information: Lease term                   2 years (8 quarters) Quarterly payments     $20,000 at the beginning of each period Economic life              2 years Fair value of asset       $153,255 Annual implicit rate    5% What do the lessee’s entries include on April 1, 2021? a. Debit Lease Payable by $20,000 b. Debit Lease Payable by $18,334 and Interest Expense...
Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians'...
Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $1,730,000 and leased it to Mid-South Urologists Group, Inc., on January 1, 2016. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)   Lease Description:   Quarterly lease payments $ 122,400 —beginning of each period   Lease term 5 years (20 quarters)   No...
Grichuk Power leased high-tech electronic equipment from Kolten Leasing on January 1, 2018. Kolten purchased the...
Grichuk Power leased high-tech electronic equipment from Kolten Leasing on January 1, 2018. Kolten purchased the equipment from Wong Machines at a cost of $250,000, its fair value. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly lease payments $15,000 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, and...
Python Company leased equipment from Hope Leasing on January 1, 2018. Hope recently purchased the equipment...
Python Company leased equipment from Hope Leasing on January 1, 2018. Hope recently purchased the equipment at a cost of $271,910. Other information: Lease term 4 years Annual payments $77,000 on January 1 each year Life of asset 4 years Fair value of asset $271,910 Implicit interest rate 9% Incremental rate 9% There is no expected residual value. Required: Prepare appropriate journal entries for Python for 2018. Assume straight-line depreciation and a December 31 year-end. (If no entry is required...
Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2018. Hi-Tech manufactured the equipment...
Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2018. Hi-Tech manufactured the equipment at a cost of $85,000. Other information: Lease term 4 years Annual payments $30,000 on January 1 each year Life of asset 4 years Fair value of asset $105,939 Implicit interest rate 9% Incremental rate 9% There is no expected residual value. Required: Prepare appropriate journal entries for Hi-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a...
Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2018. Hi-Tech manufactured the equipment...
Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2018. Hi-Tech manufactured the equipment at a cost of $85,000. Other information: Lease term 4 years Annual payments $30,000 on January 1 each year Life of asset 4 years Fair value of asset $105,939 Implicit interest rate 9% Incremental rate 9% There is no expected residual value. Required: Prepare appropriate journal entries for Hi-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a...
Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2018. Hi-Tech manufactured the equipment...
Southwestern Edison Company leased equipment from Hi-Tech Leasing on January 1, 2018. Hi-Tech manufactured the equipment at a cost of $87,000. Other information: Lease term 4 years Annual payments $34,000 on January 1 each year Life of asset 4 years Fair value of asset $121,621 Implicit interest rate 8% Incremental rate 8% There is no expected residual value. Required: Prepare appropriate journal entries for Hi-Tech Leasing for 2018. Assume a December 31 year-end. (If no entry is required for a...
Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2018. International Machines manufactured...
Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2018. International Machines manufactured the equipment at a cost of $89,000. Manufacturers Southern's fiscal year ends December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $16,000 at the beginning of each period Economic life of asset 2...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT