On January 1, 2020, Sheffield Inc. sold computer equipment to Shamrock Co. The sales price of the equipment was $526,000 and its carrying amount is $397,000. Record any journal entries necessary for Sheffield from the sale of the computer equipment in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
1/1/20

  

Use the information from part a. Assume that, on the same day the sale occurred, Sheffield enters into an agreement to lease the equipment from Shamrock for 10 years with annual lease payments of $64,851.00 at the end of each year, beginning on December 31, 2020. If Sheffield has an incremental borrowing rate of 4% and the equipment has an economic useful life of 10 years, record any journal entries necessary for Sheffield from the sale and leaseback of computer equipment in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.25. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
1/1/2012/31/20
1/1/2012/31/20

  

Use the information from part b. Now, instead of 10 years, the lease term is only 3 years with annual lease payments of $64,851.00 at the beginning of each year. Record any journal entries necessary for Sheffield from the sale and leaseback of computer equipment in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.25. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
1/1/2012/31/20
	(To record sale of equipment)
1/1/2012/31/20
	(To record the lease)
1/1/2012/31/20
	(To record lease payment)
1/1/2012/31/20

Answer rating: 100% (QA)

In a sale and lease back transaction it is to be considered if the transaction qualifies as capital ... View the full answer