Accounting $2036,$ Assignment #$1$

$On$ July $1^{st},20X4,$ the Yuan Yuan Guo Corporation, a manufacturer and distributor $of$

$DVD$ recorders, entered a lease with Zhiyin Huang Rental Inc. Yuan Yuan Guo agreed

$to$ lease $20DVDs$ for a period $of$ six years beginning July $1^{st},20X4.$ Other lease terms

$as$ follows:

Estimated Residual Value $of$ each $DVDat$ the end $of$ the lease term

$(not$ guaranteed $by$ Zhiyin Huang$)$

Zhiyin Huang can borrow $at12\mathrm{.}0$ percent and agrees $to$ assume full responsibility for all

repairs and maintenance $of$ the machines. Zhiyin Huang will return the $DVDsto$ Yuan

Yuan Guo. Since Zhiyin Huang $is$ a good credit risk, Yuan Yuan Guo $is$ certain $to$ collect

the lease payments and will not incur any additional costs after the date $of$ the lease

agreement. Both Companies follow ASPE Required:

Required:

Determine how Yuan Yuan Guo, the lessor, and Zhiyin Huang, the lessee, should

classify the lease.

Prepare all required journal entries for the Lessee $on$ July $1^{st},20X4.$

Prepare the required journal entries for the Lessee $on$ December ${31}^{st},204$

$(assuming$ a December $31st$ Fiscal Year End$).$

Prepare the required journal entries for the Lessee $on$ July $1^{st},205.$

Prepare the required journal entries for the Lessee $on$ December ${31}^{st},20{531}^{st}$ Fiscal Year End$1^{st},20X4.$

Prepare the required journal entries for the Lessor $on$ December ${31}^{st},20x{431}^{st}$ Fiscal Year End$1^{st}$