Question: On January 1, 2013, Cook Textiles leased a building with two acres of land from Peck Development. The lease is for 10 years at which

On January 1, 2013, Cook Textiles leased a building with two acres of land from Peck Development. The lease is for 10 years at which time Cook has an option to purchase the property for $100,000. The building has an estimated life of 20 years with a residual value of $150,000. The lease calls for Cook to assume all costs of ownership and to make annual payments of $200,000 due at the beginning of each year. On January 1, 2013, the estimated value of the land was $400,000. Cook uses the straight-line method of depreciation and pays 10% interest on borrowed money. Peck's implicit rate is unknown.

Prepare Cook Company's journal entries related to the lease in 2013.

Step by Step Solution

★★★★★

3.47 Rating (163 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Computation of the Journal Entries Since exercise of the option come into view at the commencement o... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

68-B-A-G-F-A (1430).xlsx

300 KBs Excel File

Students Have Also Explored These Related Accounting Questions!

You plan to purchase a house for $175,000 using a 15-year mortgage obtained from your local bank. You will make a down payment of 25 percent of the purchase price. You will not pay off the mortgage...

On January 1, 2011, Cook Textiles leased a building with two acres of land from Peck Development. The lease is for 10 years at which time Cook has an option to purchase the property for $100,000. The...

An electronics manufacturer has an option to produce six styles of cell phones. Each of these devices requires time, in minutes, on three types of electronic testing equipment, as shown in the table...

A pump is required for 10 years at a remote location. The pump can be driven by an electric motor if a power line is extended to the site. Otherwise, a gasoline engine will be used. Use an annual...

On January 1, 2013, Cook Textiles leased a building with two acres of land from Peck Development. The lease is for 10 years. No purchase option exists and the property will revert to Peck at the end...

On January 1, 2011, Cook Textiles leased a building with two acres of land from Peck Development. The lease is for 10 years. No purchase option exists and the property will revert to Peck at the end...

CHAPTER 15 Leases 913 Required 1. Prepare the appropriate entries for North American on (a) January 1.2016, to the sale leaseback and 31, 2016, to record record necessary adjustments. 2. Show how...

Question 4(a) On January 1, 2017, Kekwa Textiles leased a building with two acres of land from Zul Arifin development. The lease is for 10 years. No purchase option exists and the property will...

Lease Question On January 1, 2016, Kekwa Textiles leased a building with two acres of land from Zul Arifin development. The lease is for 10 years. No purchase option exists and the property will...

Question On January 1, 2016, Kekwa Textiles leased a building with two acres of land from Zul Arifin development. The lease is for 10 years. No purchase option exists and the property will revert to...

On July 1, 2020, Billie Corporation issues $10,000,000 of 5% bonds at 103.2, with a maturity date of June 30, 2030. Eight detachable stock warrants are included with each $1,000 bond and each warrant...

Write a summary of Chapter: Airport Performance Benchmarking in which you address the following: 1. Abstract 2. Introduction 3. Conclusion

If x is inversely proportional to y and x = 50 when y = 2 (i) find the value of x when y = 4 (ii) find an equation connecting x and y, (iii) calculate the value of y when x = 3.2

McLin, Inc., is a calendar year S corporation. Its AAA balance is zero. a. McLin holds $90,000 of AEP. Tobias, the sole shareholder, has an adjusted basis of $80,000 in his stock. Determine the tax...

Access the financial statements in the 2010 annual report for CVS Caremark Corp. by clicking on the Investors and Annual Reports links at www.cvs.com. Required a. For CVS Caremark's current year,...

Which method of making capital budgeting decisions do you believe would work best for Kay in purchasing new equipment for SWAN?

On June 1 you begin an ocean tour business for the summer by contributing $600 of contributed capital and borrowing $600 from your parents. With your money, you pay $480 in June to rent a boat and...

Marshall, Inc., reported the following items at December 31,2016, and 2015: Requirements 1. Compute Marshall's (a) quick (acid-test) ratio and (b) days' sales outstanding for 2016. Evaluate each...

17. Peter Minn is planning to go to the Department of Motor Vehicles to have his drivers license renewed. His friend, Patricia, who is accompanying him, is applying for a new license. In both cases...

What effect does an increase in volume have on? (a) Unit fixed costs? (b) Unit variable costs? (c) Total fixed costs? (d) Total variable costs?

Define the following terms; (a) Cost behavior and (b) Relevant range

What is meant by an activity base when dealing with variable costs? Give several examples of activity bases.

3. There is a semi-batch reactor with 100 L X solution at a concentration of 2 mol/L. Inert solution (I) at a concentration of 0.5 mol/L is sent to this reactor at a rate of 0.75 L/min. Reaction...

Please answer the questions Show all images Show all images Show all images done loading

1) Find the value of the grand mean glucose content, SSA and MSA. 2) Find SSW and MSW. 3) At the 5% level, test whether the glucose content is affected by by the type of carbohydrate. Five groups,...