On January 1, 2024, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Aqua.

• The equipment cost Aqua $414,430 and has an expected economic life of five years.
• Aqua and Maywood expect the residual value at December 31, 2027, to be $52,000.
• Negotiations led to Maywood guaranteeing a $73,000 residual value.
• Equal payments under the lease are $104,000 and are due on December 31 of each year with the first payment being made on December 31, 2024.
• Maywood is aware that Aqua used a 7% interest rate when calculating lease payments.

Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

Required:

1. & 2. Prepare the appropriate entries for Maywood on January 1, 2024 and December 31, 2024, related to the lease.

Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar.

Transcribed Image Text:

On January 1, 2024, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $414,430 and has an expected economic life of five years. Aqua and Maywood expect the residual value at December 31, 2027, to be $52,000. Negotiations led to Maywood guaranteeing a $73,000 residual value. Equal payments under the lease are $104,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1, 2024 and December 31, 2024, related to the lease. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar. View transaction list Journal entry worksheet < 1 2 3 Record the beginning of the lease for Maywood Hydraulics. Note: Enter debits before credits. Date January 01, 2024 General Journal Debit Credit > On January 1, 2024, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $414,430 and has an expected economic life of five years. Aqua and Maywood expect the residual value at December 31, 2027, to be $52,000. Negotiations led to Maywood guaranteeing a $73,000 residual value. Equal payments under the lease are $104,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1, 2024 and December 31, 2024, related to the lease. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar. View transaction list Journal entry worksheet < 1 2 3 Record the beginning of the lease for Maywood Hydraulics. Note: Enter debits before credits. Date January 01, 2024 General Journal Debit Credit >