Sheridan Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of...
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Sheridan Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $93,500. Under the 3-year, non- cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2020. Sheridan expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, beginning December 31, 2020. Click here to view factor tables. Your answer is correct. Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.) Reduction of Principal Date 1/1/20 12/31/20 12/31/21 12/31/22 Rent Receipt/ Payment 36281.13 36281.13 36281.13 $ Interest Revenue/ Expense 7480 5175.91 2687.49 $ 28801.13 31105.22 33593.65 $ Receivable/ Liability 93500 64698.87 33593.65 0 Prepare the journal entry at commencement of the lease for Sharrer. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation 1/1/20 Machinery Lease Liability Debit 108843.4 Credit 108843.4 Sheridan Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $93,500. Under the 3-year, non- cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2020. Sheridan expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, beginning December 31, 2020. Click here to view factor tables. Your answer is correct. Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places e.g. 5,275.) Reduction of Principal Date 1/1/20 12/31/20 12/31/21 12/31/22 Rent Receipt/ Payment 36281.13 36281.13 36281.13 $ Interest Revenue/ Expense 7480 5175.91 2687.49 $ 28801.13 31105.22 33593.65 $ Receivable/ Liability 93500 64698.87 33593.65 0 Prepare the journal entry at commencement of the lease for Sharrer. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation 1/1/20 Machinery Lease Liability Debit 108843.4 Credit 108843.4
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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