Exercise 21-12

Please include your work & explainations

Exercise 21-12 On January 1, 2017, Kingbird Co. leased a building to Oriole Inc. The relevant information related to the lease is as follows 1. The lease arrangement is for 10 years 2. The leased building cost $4,405,000 and was purchased for cash on January 1, 2017 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value 4. Lease payments are $270,700 per year and are made at the end of the year 5. Property tax expense of $89,700 and insurance expense of $10,900 on the building were incurred by Kingbird in the first year. Payment on these two items was made at the end of the year. 6. Both the lessor and the lessee are on a calendar-year basis (a) Prepare the journal entries that Kingbird Co. should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) DateAccount Titles and Explanation Debit Credit (To record receipt of lease payment.) (To record depreciation.) (To record insurance and property tax.) (b) Prepare the journal entries that Oriole Inc. should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) DateAccount Titles and Explanation Debit Credit 12/31/17 (c) If Kingbird paid $30,100 to a real estate broker on January 1, 2017, as a fee for finding the lessee, how much should Kingbird Co. report as an expense for this item in 2017? Expense should be reported Exercise 21-12 On January 1, 2017, Kingbird Co. leased a building to Oriole Inc. The relevant information related to the lease is as follows 1. The lease arrangement is for 10 years 2. The leased building cost $4,405,000 and was purchased for cash on January 1, 2017 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value 4. Lease payments are $270,700 per year and are made at the end of the year 5. Property tax expense of $89,700 and insurance expense of $10,900 on the building were incurred by Kingbird in the first year. Payment on these two items was made at the end of the year. 6. Both the lessor and the lessee are on a calendar-year basis (a) Prepare the journal entries that Kingbird Co. should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) DateAccount Titles and Explanation Debit Credit (To record receipt of lease payment.) (To record depreciation.) (To record insurance and property tax.) (b) Prepare the journal entries that Oriole Inc. should make in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) DateAccount Titles and Explanation Debit Credit 12/31/17 (c) If Kingbird paid $30,100 to a real estate broker on January 1, 2017, as a fee for finding the lessee, how much should Kingbird Co. report as an expense for this item in 2017? Expense should be reported