Lessee You leased a machine from another company on August 1, 2021 and paid a total...

 

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Lessee You leased a machine from another company on August 1, 2021 and paid a total of $2,400 for the next 6 months. (August 1 - January 31). On December 31, 2021, you made the appropriate adjusting entry. 1. What type of lease is this for the lessee? Why? 2. Prepare all the entries your company should make as the lessee related to this lease in 2021 and 2022 including adjusting and reversing entries Lessor You leased a machine to another company on May 1, 2021, and set the annual payments of $9,000 each year on May 1 (payments at the BEGINNING) for eight years. The lease indicates that the ownership of the equipment will transfer to the lessee automatically at the end of the eight years if each of the annual payments is made on time. The equipment cost $60,000, has a book value of $50,000, has a fair value (i,e., the "selling price") of $53,000, an estimated remaining life of 10 years, and an estimated salvage value of $4,000. 1. What type of lease is this for the lessor? Why? 2. Determine the implicit interest rate. Please show what you entered into your calculator and round the interest rate to two decimals such as 8.31% or 6.18% etc. 3. Prepare all the entries your company should make as the lessor related to this lease in 2021 and 2022 including adjusting and reversing entries. Please show your calculations. This means you will need entries on: a. May 1, 2021 b. December 31, 2021 c. January 1, 2022 d. May 1, 2022 e. December 31, 2022 4. List all of the accounts you used in the journal entries above and indicate where each account should be reported on the financial statements for 2021, such as "Interest Receivable should be a current Asset." Lessee You leased a machine from another company on August 1, 2021 and paid a total of $2,400 for the next 6 months. (August 1 - January 31). On December 31, 2021, you made the appropriate adjusting entry. 1. What type of lease is this for the lessee? Why? 2. Prepare all the entries your company should make as the lessee related to this lease in 2021 and 2022 including adjusting and reversing entries Lessor You leased a machine to another company on May 1, 2021, and set the annual payments of $9,000 each year on May 1 (payments at the BEGINNING) for eight years. The lease indicates that the ownership of the equipment will transfer to the lessee automatically at the end of the eight years if each of the annual payments is made on time. The equipment cost $60,000, has a book value of $50,000, has a fair value (i,e., the "selling price") of $53,000, an estimated remaining life of 10 years, and an estimated salvage value of $4,000. 1. What type of lease is this for the lessor? Why? 2. Determine the implicit interest rate. Please show what you entered into your calculator and round the interest rate to two decimals such as 8.31% or 6.18% etc. 3. Prepare all the entries your company should make as the lessor related to this lease in 2021 and 2022 including adjusting and reversing entries. Please show your calculations. This means you will need entries on: a. May 1, 2021 b. December 31, 2021 c. January 1, 2022 d. May 1, 2022 e. December 31, 2022 4. List all of the accounts you used in the journal entries above and indicate where each account should be reported on the financial statements for 2021, such as "Interest Receivable should be a current Asset."

Answer rating: 100% (QA)

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