On 30 June 20X1 Black Ltd signed a contract to lease a vehicle from Beauty Ltd....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 30 June 20X1 Black Ltd signed a contract to lease a vehicle from Beauty Ltd. On the day the lease contract was signed, Beauty Ltd purchased the vehicle for $38,960. Black Ltd incurred $1,178 in initial costs to obtain the lease. The lease agreement contained the following provisions. Lease Term Annual rental payments (commencing 30 June 20X1) Residual value guarantee Amount of the residual value guarantee that is expected to be payable by the lessee at the end of the lease term Interest rate implicit in the lease 3 years $11,200 $12,000 $2,000 5% The expected useful life of the vehicle is 5 years. The residual value at the end of its expected useful life is nil. At the end of the 3-year lease term, the car was returned to Beauty Ltd, who sold it for $10,000. The annual rental payments include an amount of $1,200 to cover the cost of maintenance and repairs that were arranged and paid for by Beauty Ltd. Required 1. Prepare the journal entries for Black Ltd from 30 June 20X1 to 30 June 20X4. 2. Assuming that the lease is a finance lease from the perspective of Beauty Ltd, prepare the journal entries for Beauty Ltd from 30 June 20x1 to 30 June 20X4. 3. Assuming that the lease is an operating lease from the perspective of Beauty Ltd, prepare the journal entries for Beauty Ltd from 30 June 20X1 to 30 June 20X4. On 30 June 20X1 Black Ltd signed a contract to lease a vehicle from Beauty Ltd. On the day the lease contract was signed, Beauty Ltd purchased the vehicle for $38,960. Black Ltd incurred $1,178 in initial costs to obtain the lease. The lease agreement contained the following provisions. Lease Term Annual rental payments (commencing 30 June 20X1) Residual value guarantee Amount of the residual value guarantee that is expected to be payable by the lessee at the end of the lease term Interest rate implicit in the lease 3 years $11,200 $12,000 $2,000 5% The expected useful life of the vehicle is 5 years. The residual value at the end of its expected useful life is nil. At the end of the 3-year lease term, the car was returned to Beauty Ltd, who sold it for $10,000. The annual rental payments include an amount of $1,200 to cover the cost of maintenance and repairs that were arranged and paid for by Beauty Ltd. Required 1. Prepare the journal entries for Black Ltd from 30 June 20X1 to 30 June 20X4. 2. Assuming that the lease is a finance lease from the perspective of Beauty Ltd, prepare the journal entries for Beauty Ltd from 30 June 20x1 to 30 June 20X4. 3. Assuming that the lease is an operating lease from the perspective of Beauty Ltd, prepare the journal entries for Beauty Ltd from 30 June 20X1 to 30 June 20X4.
Expert Answer:
Answer rating: 100% (QA)
1 Journal entries for Black Ltd a On 30 June 20X1 Lease Commencement Leased Vehicle Right of Use Ass... View the full answer
Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
On July 1, 2006, Sweetman Company signed a contract to lease space in a building for 15 years. The lease contract calls for annual (prepaid) rental payments of $70,000 on each July 1 throughout the...
-
On July 1, 2006, Harper Company signed a contract to lease space in a building for 15 years. The lease contract calls for annual (prepaid) rental payments of $80,000 on each July 1 throughout the...
-
(a) An n n matrix K is the encryption matrix for the Hill cipher. Give the encryption formula. (b) The plaintext is (2, 5, 1,0). Encrypt it (show your work and the ciphertext) using the Hill cipher...
-
Furniture.com uses automated shipping equipment. Assume that early in year 1, Furniture purchased equipment at a cost of $400,000. Management expects the equipment to remain in service for five...
-
Using Rankines earth pressures and neglecting the passive resistance, determine the factor of safety with respect to sliding and overturning for the gravity retaining wall shown in Figure P17.4. The...
-
Two masses \(m_{1}\) and \(m_{2}\) are attached to a stretched wire, as shown in Fig. 13.30. If the initial tension in the wire is \(P\), derive the equations of motion for large transverse...
-
Asbat Pharmaceuticals (Asbat) is a leading pharmaceutical company that has been in existence for 22 years. Asbat has a calendar year-end and is audited annually. Asbat only operates in the United...
-
What factors should be considered when thinking about cost control strategies?
-
Josie is an accounting supervisor at Monk & Sons Realty. She instructs her subordinate, Maria, to make certain accounting entries in the company's books that will increase revenue by a material...
-
Cherokee Incorporated is a merchandiser that provided the following information: Number of units sold Selling price per unit Variable selling expense per unit Variable administrative expense per unit...
-
The objective of this team assignment is to analyze the different investment decision criteria applied to the expected cashflow structure of a hypothetical project. For this assignment, you need to...
-
Non-legislative Powers 1. Power to administer federal lands 2. Power to admit new states and territories 3. Power to give advice and consent to the President when confirming judges 4. Power to bring...
-
Never connect the Positive (+) lead of a power supply to the ground. Connect the negative lead of the power supply to the circuit FIRST. Then, connect the positive lead. Parts: Breadboard DC Power...
-
Q:1 Ms. Sarah is a single woman with no children. Her parents, all pass away long time ago, the only relative she has is her sister, who is also her employee. Moreover, she is a successful business...
-
1. Draw a Magnel diagram for the 'T' section shown in Figure Q1 if the section is to resist moments of 100 kNm and 200 kNm at transfer and in service respectively. Allow for 15% loss of prestress in...
-
Arnold Industries started the year with $104,800 cash and reported net cash provided by operating activities of $210,000, cash paid for dividends of $42,400, cash received from stock issuance of...
-
Cleaning Service Company's Trial Balance on December 31, 2020 is as follows: Account name Debit Credit Cash 700 Supplies Pre-paid insurance Pre-paid office rent Equipment Accumulated depreciation -...
-
On March 1, 2011, Abbey and Dames formed a partnership. Abbey contributed $88,000 cash and Dames contributed land valued at $70,000 and a building valued at $100,000. The partnership also assumed...
-
Review the balance sheet of Research In Motion in Appendix A. Identify one asset account that requires adjustment before annual financial statements can be prepared. What would be the effect on the...
-
Use Research In Motions financial statements in Appendix A to compute its return on total assets for fiscal years ended February 27, 2010, and February 28, 2009. Total assets at March 1, 2008, were...
-
The tube is subjected to a torque of 750 N. m. Determine the amount of this torque that is resisted by the gray shaded section. Solve the problem two ways: (a) by using the torsion formula, (b) by...
-
The solid shaft has a diameter of 0.75 in. If it is subjected to the torques shown, determine the maximum shear stress developed in regions BC and DE of the shaft. The bearings at A and F allow free...
-
The solid shaft has a diameter of 0.75 in. If it is subjected to the torques shown, determine the maximum shear stress developed in regions CD and EF of the shaft. The bearings at A and F allow free...
Study smarter with the SolutionInn App