On January 1, 2020, Blossom Company leased equipment to Daylight Corporation. The following information pertains to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 2020, Blossom Company leased equipment to Daylight Corporation. The following information pertains to this lease. 1. The term of the non-cancelable lease is 4 years. At the end of the lease term, Daylight has the option to purchase the equipment for $1,900, while the expected residual value at the end of the lease is $15,000. 2. Equal rental payments are due on January 1 of each year, beginning in 2020. 3. The fair value of the equipment on January 1, 2020, is $220,000, and its cost is $189,000. 4. The equipment has an economic life of 5 years. Daylight depreciates all of its equipment on a straight-line basis. 5. 6. Blossom set the annual rental to ensure a 4% rate of return. Daylight's incremental borrowing rate is 5%, and the implicit rate of the lessor is unknown. Collectibility of lease payments by the lessor is probable. Both the lessor and the lessee's accounting periods end on December 31. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Prepare all the necessary journal entries for Blossom for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation (To record the lease) (To record lease payment) Debit Credit On January 1, 2020, Blossom Company leased equipment to Daylight Corporation. The following information pertains to this lease. 1. The term of the non-cancelable lease is 4 years. At the end of the lease term, Daylight has the option to purchase the equipment for $1,900, while the expected residual value at the end of the lease is $15,000. 2. Equal rental payments are due on January 1 of each year, beginning in 2020. 3. The fair value of the equipment on January 1, 2020, is $220,000, and its cost is $189,000. 4. The equipment has an economic life of 5 years. Daylight depreciates all of its equipment on a straight-line basis. 5. 6. Blossom set the annual rental to ensure a 4% rate of return. Daylight's incremental borrowing rate is 5%, and the implicit rate of the lessor is unknown. Collectibility of lease payments by the lessor is probable. Both the lessor and the lessee's accounting periods end on December 31. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Prepare all the necessary journal entries for Blossom for 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation (To record the lease) (To record lease payment) Debit Credit
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Given the observed yields below, what is the 1-year forward rate, 4 years from now? [Hint: This is the 1-year return that will take you from the 4-year average annualized return (yield) to the 5-year...
-
Equipment was acquired at the beginning of the year at a cost of $158,000. The equipment was depreciated using the straight-line method based upon an estimated useful life of 10 years and an...
-
Use the information in the following table to compute each departments contribution to overhead (both in dollars and as a percent). Which department contributes the largest dollar amount to total...
-
Although depreciation expense is recognized on the income statement under the accrual basis of accounting, it does not involve an outflow of cash. Why?
-
Faircloth Financial specializes in home equity loans, loans that customers can take out against the equity they have in their homes. ("Equity" represents the difference between the home's value and...
-
Does the FAR prescribe what the contracting officer/agency has to do in case of protests submitted to the COFC or is that information found somewhere else IAW FAR 33.105
-
Demonstrate Theorem 4.14 (attached below) by factoring p(x)= X^3 + 6 as a product of irreducible in Z7[X] in two ways. explain how your answer demonstrates the theorem. Theorem 4.14 Let F be a field....
-
What are the main arguments for and against treating prenatal drug exposure as a kind of child abuse or neglect?
-
What was the common law status of children of unmarried parents? Why were these children treated so harshly?
-
Why was the biological father barred from pursuing his paternity claim in the case of Michael H. v. Gerald D.?
-
Under which circumstances, if any, do you think that paralegals should be able to provide clients with legal advice?
-
Generally speaking, how did ASFA change the approach to cases of substantiated child abuse or neglect?
-
Loring Company incurred the following costs last year: Costs Amounts Direct materials $211,000 Factory rent 20,000 Direct labor 125,000 Factory utilities 6,800 Supervision in the factory 47,000...
-
For a nonzero constant a, find the intercepts of the graph of (x 2 + y 2 ) 2 = a 2 (x 2 - y 2 ). Then test for symmetry with respect to the x-axis, the y-axis, and the origin.
-
Describe and explain the difference between the short run and the long run.
-
Which of the following is true? a. Productive efficiency occurs in perfect competition because the firm produces at the minimum of the ATC curve. b. Allocative efficiency occurs when P = MC;...
-
Describe and explain the concept of economic profits and sunk costs.
Study smarter with the SolutionInn App