On June 30, 2024, Clark, Incorporated leased warehouse equipment from Woodward, Incorporated. The lease agreement calls...

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On June 30, 2024, Clark, Incorporated leased warehouse equipment from Woodward, Incorporated. The lease agreement calls for Clark to make semiannual lease payments of $700,000 over a 2-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment on June 30, 2024. Clark's incremental borrowing rate is 10%, the same rate Woodward used to calculate lease payment amounts. Woodward manufactured the equipment at a cost of $2,220,000. Lease date Semi-annual payments Lease term Payments per year Equipment's cost Clark's incremental borrowing rate 1. Determine the price at which Woodward is 'selling' the equipment (present value of the lease payments) using Excel's PV function. 2. Prepare the journal entry to record the sale by Woodward Incorporated on June 30, 2024. Date June 30, 2024 General Journal 3. Prepare an amortization schedule for the 2-year term of the lease. June 30, 2024 December 31, 2024 June 30, 2025 December 31, 2025 Totals Date Debit Credit June 30, 2024 $700,000 2 years 2 $2,220,000 10% Lease Payments Effective Interest Decrease in Balance Outstanding Balance 0 0 0 4. Prepare the journal entry to record the first lease payment received by Woodward Incorporated on June 30, 2024. Date General Journal Debit Credit June 30, 2024 5. Prepare the journal entry to record the second lease payment received by Woodward Incorporated on December 31, 2024. Date General Journal Debit Credit December 31, 2024 6. Indicate the amounts related to the lease reported on the year-end balance sheets and income statements. (Ignore taxes) December 31, 2024 December 31, 2025 Date Balance Sheet Income Statement Amounts Lease Receivable Interest Revenue Selling profit Total effect on income (pretax) $0 $0 On June 30, 2024, Clark, Incorporated leased warehouse equipment from Woodward, Incorporated. The lease agreement calls for Clark to make semiannual lease payments of $700,000 over a 2-year lease term (also the asset's useful life), payable each June 30 and December 31, with the first payment on June 30, 2024. Clark's incremental borrowing rate is 10%, the same rate Woodward used to calculate lease payment amounts. Woodward manufactured the equipment at a cost of $2,220,000. Lease date Semi-annual payments Lease term Payments per year Equipment's cost Clark's incremental borrowing rate 1. Determine the price at which Woodward is 'selling' the equipment (present value of the lease payments) using Excel's PV function. 2. Prepare the journal entry to record the sale by Woodward Incorporated on June 30, 2024. Date June 30, 2024 General Journal 3. Prepare an amortization schedule for the 2-year term of the lease. June 30, 2024 December 31, 2024 June 30, 2025 December 31, 2025 Totals Date Debit Credit June 30, 2024 $700,000 2 years 2 $2,220,000 10% Lease Payments Effective Interest Decrease in Balance Outstanding Balance 0 0 0 4. Prepare the journal entry to record the first lease payment received by Woodward Incorporated on June 30, 2024. Date General Journal Debit Credit June 30, 2024 5. Prepare the journal entry to record the second lease payment received by Woodward Incorporated on December 31, 2024. Date General Journal Debit Credit December 31, 2024 6. Indicate the amounts related to the lease reported on the year-end balance sheets and income statements. (Ignore taxes) December 31, 2024 December 31, 2025 Date Balance Sheet Income Statement Amounts Lease Receivable Interest Revenue Selling profit Total effect on income (pretax) $0 $0