Dubois Steel Corporation, as lessee, signed a lease agreement for equipment for five years, beginning January 31,
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Instructions
Answer the following questions, rounding all numbers to the nearest dollar.
(a) Prepare the journal entry or entries, with explanations, that should be recorded on January 31, 2011, by Dubois.
(b) Prepare any necessary adjusting journal entries at December 31, 2011, and the journal entry or entries, with explanations, that should be recorded on January 31, 2012, by Dubois. (Prepare the lease amortization schedule for the lease obligation using a computer spreadsheet for the minimum lease payments.) Dubois does not use reversing entries.
(c) Prepare any necessary adjusting journal entries at December 31, 2012, and the journal entry or entries, with explanations, that should be recorded on January 31, 2013, by Dubois.
(d) What amounts would appear on Dubois’ December 31, 2012 balance sheet relative to the lease arrangement?
(e) What amounts would appear on Dubois’ statement of cash flows for 2011 relative to the lease arrangement? Where would the amounts be reported?
(f) Assume that the leased equipment had a fair value of $200,000 at the inception of the lease, and that no bargain purchase option is available at the end of the lease. Determine what amounts would appear on Dubois’ December 31, 2012 balance sheet and what amounts would appear on the 2012 statement of cash flows relative to the leasing arrangements. Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Related Book For
Intermediate Accounting
ISBN: 978-0470161012
9th Canadian Edition, Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.
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