Accounting Problem (Simple)

Instructions

Com plete Problem 2.png use the list of Accounts Below.

List of Accounts

• Accounts Payable
• Accounts Receivable
• Accumulated Depreciation - Leased Buildings
• Accumulated Depreciation - Buildings
• Accumulated Depreciation - Leased Equipment
• Accumulated Depreciation - Rental Equipment
• Accumulated Depreciation - Right-of-Use Asset
• Accumulated Depreciation - Software under Lease
• Accumulated Depreciation - Vehicles
• Accumulated Depreciation - Vehicles under Lease
• Amortization Expense
• Buildings
• Buildings under Lease
• Cash
• Cost of Goods Sold
• Deferred Profit on Sale-Leaseback
• Depreciation Expense
• Equipment
• Equipment Acquired for Lessee
• Equipment under Lease
• Insurance Expense
• Insurance Payable
• Insurance Revenue
• Interest Expense
• Interest Income
• Interest Payable
• Interest Receivable
• Inventory
• Land Rental Expense
• Land under Lease
• Lease Liability
• Lease Receivable
• Legal Expense
• Loss on Lease
• Low Value Lease Expense
• No Entry
• Obligations under Lease
• Operating Expenses
• Prepaid Expenses
• Prepaid Insurance
• Prepaid Rent
• Property Tax Expense
• Rent Expense
• Rental Equipment
• Rent Payable
• Rent Receivable
• Rent Revenue
• Repairs and Maintenance Expense
• Right-of-Use Asset
• Sales Revenue
• Selling Expenses
• Short-Term Lease Expense
• Software under Lease
• Unearned Interest Income
• Unearned Rent Revenue
• Vehicles
• Vehicles under Lease

Problem 2.png

Cullumber Corporation, which uses ASPE, enters into a 6-year lease of equipment on September 1, 2020, that requires 6 annual payments of $28,800 each, beginning September 1, 2020. The equipment has a useful life of seven years. Assume that a residual value of $17,300 is expected at the end of the lease, but that Cullumber does not guarantee the residual value. Using (1) tables, (2) a financial calculator, or (3) Excel functions, calculate the amount of the capital lease. Prepare Cullumber's September 1, 2020 journal entry, assuming an interest rate of 8% and that Merrill also uses ASPE. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit (To record inception of lease and first lease payment.)