Question

Exercise 15-35 (Algo) Lessor's initial direct costs; sales-type lease (LO15-3, 15-7) The lease agreement and related facts indicate the following: a. Leased equipment had a retail cash selling price of $400,000. Its useful life was six years with no residual value. b. The lease term was six years and the lessor paid $315,000 to acquire the equipment (thus, selling profit). c. Lessor's implicit rate when calculating annual lease payments was 8%. d. Annual lease payments beginning January 1, 2021, the beginning of the lease, were $80,117. e. Incremental costs of commissions for brokering the lease and consummating the completed lease transaction incurred by the lessor were $8,500. Required: 1. & 2. Prepare the appropriate entries for the lessor to record the lease and the initial payment at its commencement and any entry(s) necessary at December 31, 2021, the fiscal year-end. (Round your intermediate and final answers to the nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 2 3 4 Record the lease.

Answer 1

Answer legre An organisation suffers with the unsufficient cash to meet the operations of business. In such scenqejo, to run operations with assets, an ently lease various aroels in portfoljo. Leque is the agreement between two pertjes where one party agrees to give right of ure to the other party The party who gives right is the lesson and party who your Lavoret is the lessee lessee provider ganyg) payment for the wre of asset with interest on outstyling beleg ce of lease In the question, we have to cal ulgbe the leque valye. teise : Annual X p sum of is of Valye lepse lymegt 8% for 6 years = $ 180113 x 1 + 1} mat 21.8875 T 4.9927 • ¿ $ $ 80117_X 400000 It is a capity) legre qs the lease berm overs the ea nomic life of the quet is (6 years = 6 years). Therefore Lesson cannot record the Depeciation on equipment 4 4 books

Pake Debit (4) helict) In the books of Lesson - Journal Entries particolaus wil Lease Agreement_Recording of the In septjg of leque : Leque Recenable Ale _O-400000 cost of Goods sold Ale - OVA 315000 to sales Al To Inventory - Equipment Ac I coeing to record leqse) 400040 315000 14/2 Recording Selling Expenses in the form of commission and brokevage incurred Expanuel_ALC - Ova 8500 To Cash Ale (being to record selling expenses for lease) 2500 1/1/21 | Recording first leare Payment at the | begining of lease agreement received Lash Alo - To Levie Recenable. Ale (Being to record first lease payment received at the begining of lease __ O 802.17 20112 +9)/14/41| Recording Interest on leque at yegu enda In bewest Receivable 5400000 - POJIF) 88% _Oy. 2559) - To Interest Revenue Alo (Being to reard the interest receivable on secops leque payment 23591 - Total 829208 1819208