Question

Newton Labs leased chronometers from Brookline Instruments on January 1, 2021. Brookline Instruments manufactured the chronometers at a cost of $300,000. The chronometers have a fair value of $375,275. Appropriate adjusting entries are made quarterly (FV of $1. PV of S1, FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) Related Information: Lease term 5 years (20 quarterly periods) Quarterly lease payments $21,821 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter. Economic life of asset 6 years Estimated residual value of chronometers $16,842 at end of lease term Interest rate charged by the lesson Required: 1. Prepare appropriate entries for Newton Labs to record the arrangement at its commencement, January 1, 2021, and on March 31, 2021 2. Prepare appropriate entries for Brookline Instruments to record the arrangement at its commencement, January 1, 2021, and on March 31, 2021

Answer 1

Home insert DawPage Layout Formulas Dalia Review View Sparklines Timeline Link Chart New Comment Text Header Box Footer Pivot Recommended Table Pictures Shapes Icons My Add-ins Recommended Table Pivot Tables Charts > Office Update To keep up to date with security updates, fixes and improvements, choose Check for Updates. 254 x fx PV of the chronometres A B C D E F G H I J K L M N O P Q Journal Entries (Newton Labs) Journal Entries (Brookline Instruments) Dr Cr Dr 363940.72 363940.72 Jan-01 Gross Assets (Equipment) Lease liability 363940.72 363940.72 Jan-01 Lease Receivables Gross Asset (Equipment) Jan-01 Cash Lease Receivables 21821.00 21821.00 Jan-01 Lease Rental Expense (Reduction of Lease Liability) Cash Paid (To lessor) 21821.00 21821.00 Mar-31 Lease Rental Expense Interest Expense Cash Paid (To lessor) 14978.61 6842.39 Mar-31 Cash Lease Receivables Finance Income 14978.61 6842.39 21821.00 ist immist nimmt 21821.00 Quarterly Lease Payment 363940.72 PV of the chibnometres 20 No. of periods ( 5*4 quarters) 342119.72 Principal Amount for Interest Calculation 2 % (Interest rate quarterly) 6842.39 Interest Expense quarterly in in 14978.61 Lease liability reduction (QLP - Interest Expense) Sheet1 +

ZI Paste BI U Merge & Centre % ) Conditional Format Formatting as Table Cell Styles Insert Delete Format Clear Sort & Filter Find Sele Check for Upda Office Update To keep up to date with security updates, fixes and improvements, choose Check for Updates. 118 x ✓ fx D E F G Η K L M Journal Entries (Newton Labs) Journal Entries (Brookline Instruments) Cr Cr Dr =H25 Dr =H25 Jan 1st Jan 1st Gross Assets (Equipment) Lease liability =H25 =H25 Lease Receivables Gross Asset (Equipment) Cash Lease Receivables Jan 1st =G23 Jan 1st =G23 =G23 Lease Rental Expense (Reduction of Lease Liability) Cash Paid (To lessor) =G23 March 31st G23 March 31st Lease Rental Expense Interest Expense Cash Paid (To lessor) =G35 =G33 Cash Lease Receivables Finance Income =L11-M13 G33 =F12+F13 =21821 Quarterly Lease Payment =G23+G23*(1-(1+2%)^(-20+1)/2% PV of the chronometres 20 No. of periods (5*4 quarters) =H25-623 Principal Amount for Interest Calculation =(8/4) % (Interest rate quarterly) =G29*2% Interest Expense quarterly G23-G33 Lease liability reduction (OLP - Interest Expense) Sheet1 +