Please prepare the entries for Rauch for 2017.
Computation of Net investment in the lease.
Year | Minimum lease payment($) | Unguranteed Residual Value($) | Gross Investment($) | PVF @ 5% | Net Investment($) |
1. | 4,892 | 4,892 | 1 | 4,892 | |
2. | 4,892 | 4,892 | 0.95238 | 4,659 | |
3. | 4,892 | 4,892 | 0.90703 | 4,437 | |
4. | 4,892 | 4,892 | 0.86384 | 4,226 | |
4. | 8,250 | 8,250 | 0.82270 | 6,786 | |
27,818 | 25,000 |
Journal Entry in the books of Rauch Incorporated for 2017
Date | Account title | debit($) | Credit($) |
January 1, 2017 | Lease receivable | 25,000 | |
To Equipment | 25,000 | ||
(Being equipment given on lease) | |||
January 1, 2017 | Cash | 4,892 | |
To Lease receivable | 4,892 | ||
(Being lease rent received) | |||
December 31, 2017 | Lease receivable[(25,000-4,892) X 5%] | 1,005 | |
To Finance income (interest) | 1,005 | ||
(Being interest on lease recorded) |
Please prepare the entries for Rauch for 2017. Rauch Incorporated leases a piece of equipment to...
Question 3 Rauch Incorporated leases a piece of equipment to Donahue Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,892 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $25,000, a book value of $20,000, and both parties expect a residual value of $8,250 at the end of the lease term, though this amount is not guaranteed. Rauch set...
Rauch Incorporated leases a piece of equipment to Donahue Corporation on January 1, 2017. The lease agreement called for annual rental payments of $4,892 at the beginning of each year of the 4- year lease. The equipment has an economic useful life of 6 years, a fair value of $25,000, a book value of $20,000, and both parties expect a residual value of $8,250 at the end of the lease term, though this amount is not guaranteed. Rauch set the...
Rauch Incorporated leases a piece of equipment to Donahue Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,892 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $25,000, a book value of $20,000, and both parties expect a residual value of $8,250 at the end of the lease term, though this amount is not guaranteed. Rauch set the lease...
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