Davies Company is leasing a truck from Callahan Company-which is deemed a finance lease-and at the...
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Davies Company is leasing a truck from Callahan Company-which is deemed a finance lease-and at the time of the initial transaction there is no estimated and no guaranteed residual value. The following is a lease amortization schedule for Davies Company: Date 1/1/21 1/1/21 1/1/22 1/1/23 1/1/24 Annual Lease Payment (a) Davies Company Lease Amortization Schedule Interest (8%) on Liability (b) $ -0- 6,916.26 4,785.82 2.484.95 Reduction of Lease Lease Liability Liability (c) (d) $120,000.00 $ 33,546.73 86,453.27 26,630.47 59,822.80 28,760.91 31,061.89 31.061.89 -0- $120.000.00 $ 33,546.73 33,546.73 33,546.73 33,546.73 $134.186.92 $14.187.03 Prepare the journal entries Davies Company would make for: a. the initial recording of the lease by the lessee, b. the lease payment on 1/1/21, c. the interest expense for the year ended 12/31/21, d. the amortization of the truck (assuming straight-line method) for the year ended 12/31/21, e. the purchase of the truck by Davies on 1/1/24, for $10,000 with an estimated life of the truck being two additional years. Davies Company is leasing a truck from Callahan Company-which is deemed a finance lease-and at the time of the initial transaction there is no estimated and no guaranteed residual value. The following is a lease amortization schedule for Davies Company: Date 1/1/21 1/1/21 1/1/22 1/1/23 1/1/24 Annual Lease Payment (a) Davies Company Lease Amortization Schedule Interest (8%) on Liability (b) $ -0- 6,916.26 4,785.82 2.484.95 Reduction of Lease Lease Liability Liability (c) (d) $120,000.00 $ 33,546.73 86,453.27 26,630.47 59,822.80 28,760.91 31,061.89 31.061.89 -0- $120.000.00 $ 33,546.73 33,546.73 33,546.73 33,546.73 $134.186.92 $14.187.03 Prepare the journal entries Davies Company would make for: a. the initial recording of the lease by the lessee, b. the lease payment on 1/1/21, c. the interest expense for the year ended 12/31/21, d. the amortization of the truck (assuming straight-line method) for the year ended 12/31/21, e. the purchase of the truck by Davies on 1/1/24, for $10,000 with an estimated life of the truck being two additional years.
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Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
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