Homework Answers
The correct answer is
E ) understated, understated
Reason : if the lessor doesn't record the transaction then his actual cash in hand would be greater than the cash in hand shown in the books. This would result in Total assets being understated.
Similarly the rental income will also bebe understated than it actually is.
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A direct financing capital lease begins on 12/31/16. The first lease payment is collected by the...
1. (LESSOR ENTRIES FOR FINANCING LEASE WITH A GUARANTEED RESIDUAL) The following facts pertain to a...
1. (LESSOR ENTRIES FOR FINANCING LEASE WITH A GUARANTEED RESIDUAL) The following facts pertain to a non-cancelable lease agreement between Ace Leasing Company and King Company, a lessee. January 1, 2020 $137,171 $54,000 $500,000 Commencement of Lease Date Annual lease payment due at the beginning of the year beginning with January 1, 2020 Residual value of equipment at end of lease term, guaranteed by lessee Book Value of Lease Equipment on LESSOR books Lease term Economic life of leased equipment...
1. (LESSOR ENTRIES FOR FINANCING LEASE WITH A GUARANTEED RESIDUAL) The following facts pertain to a...
1. (LESSOR ENTRIES FOR FINANCING LEASE WITH A GUARANTEED RESIDUAL) The following facts pertain to a non-cancelable lease agreement between Ace Leasing Company and King Company, a lessee. Commencement of Lease Date January 1, 2020 Annual lease payment due at the beginning of the year beginning with January 1, 2020 $137,171 Residual value of equipment at end of lease term, guaranteed by lessee $54,000 Book Value of Lease Equipment on LESSOR books $500,000 Lease term 6 years Economic life of...
1. On 12/31/12, as part of the year-end adjusting journal entries, the Strickland Company accrues three...
1. On 12/31/12, as part of the year-end adjusting journal entries, the Strickland Company accrues three day's wages of $600 ($200 per day). The proper 12/31/12 closing entries are made. No reversing entry is made on 1/1/13. Strickland pays the weekly payroll of $1,000 on 1/2/13. The balance in the Wage Expense account after the 1/2/13 journal entry will be: Select one: a. $0 b. $400 c. $600 d. $1,000 e. $1,200 2. Which principle is most representative of the...
Problem 4: Assume the same facts as for Problem 3. A. For the lessor, is the lease a finance lease (sales-type) or...
Problem 4: Assume the same facts as for Problem 3. A. For the lessor, is the lease a finance lease (sales-type) or an operating lease? Explain why or why not. B. Prepare the lessor's journal entries through 12/31/Yr1. Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the Lease 12/31/YO Annual lease payment (Payment 1 due immediately) $20,472 Bargain Purchase Option (Lessee expects to exercise) $4,000 Lease Term 5 years Economic Life...
1.Indicate the proper journal entry to record payment of a cash dividend previously declared: Select one:...
1.Indicate the proper journal entry to record payment of a cash dividend previously declared: Select one: a. Debit Cash, credit Dividend Payable b. Debit Dividends, credit Cash 2.A bookkeeper erroneously recorded a $7 accrual of wages payable using this journal entry: Sales Discount $7 Inventory $7 Indicate the effect of the error on Expenses, Assets, and Liabilities, respectively: Select one: a. No Error, Understated, No Error b. Overstated, No Error, Understated c. Understated, Understated, Understated d. No Error, No Error,...
Fox Financing, Inc. leased a drilling machine to lease to Guy Company. The noncancelable lease requires...
Fox Financing, Inc. leased a drilling machine to lease to Guy Company. The noncancelable lease requires lease payments of $5,000 per year, payable in advance, over a four year period. There is a bargain purchase option of $10,000 for Guy. Fox's implicit interest rate (known to Guy) is 10 percent. The lease term begins on January 1, 2019. The machine's economic life is 10 years. The machine's book value is $22,000 and fair value $25,000. The collectability of the lease...
Assume that on December 31, 2016, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease...
Assume that on December 31, 2016, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement: The agreement requires equal rental payments of $68,299 beginning on December 31, 2016 The fair value of the building on December 31, 2016 is $500,513 1. 2. The building has an estimated economic life of 12 years, a guaranteed residual value of $12,000, and an expected residual value of...
Indigo Corporation enters into a 7-year lease of equipment on December 31, 2016, which requires 7...
Indigo Corporation enters into a 7-year lease of equipment on
December 31, 2016, which requires 7 annual payments of $37,500
each, beginning December 31, 2016. In addition, Indigo guarantees
the lessor a residual value of $18,700 at the end of the lease.
However, Indigo believes it is probable that the expected residual
value at the end of the lease term will be $8,700. The equipment
has a useful life of 7 years. Prepare Indigos' December 31, 2016,
journal entries assuming...
1. The Charleston Company purchases a machine on 1/1/18: The book value at 12/31/20 will be:...
1.
The Charleston Company purchases a machine on 1/1/18:
The book value at 12/31/20 will be:
Select one:
a. $16,250
b. $19,750
c. $17,000
d. $13,750
e. $22,500
2.
Given the following data:
Net Income is:
Select one:
a. Overstated $24
b. Understated $6
c. Overstated $16
d. Understated $15
e. Understated $14
3.
The Bozeman Company had current assets of $500 and current
liabilities of $400 prior to the following transactions:
1. Collection of an account receivable, $100
2....
Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date...
Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the lease 12/31/YO Annual lease payment Payment 1 due immediately) $20,472 Bargain Purchase Option (lessee expects to exercise) $4,000 Lease Term 5 years Economic Life of Leased Asset 10 years Lessor's Cost of the asset $65,000 Fair Value of the asset $91.000 Lessor's Implicit Rate & Lessee's Incremental Borrowing Rate The collectability of the lease payments by Lessor is probable. A. For the...
1. (LESSOR ENTRIES FOR FINANCING LEASE WITH A GUARANTEED RESIDUAL) The following facts pertain to a non-cancelable lease agreement between Ace Leasing Company and King Company, a lessee. January 1, 2020 $137,171 $54,000 $500,000 Commencement of Lease Date Annual lease payment due at the beginning of the year beginning with January 1, 2020 Residual value of equipment at end of lease term, guaranteed by lessee Book Value of Lease Equipment on LESSOR books Lease term Economic life of leased equipment...
1. (LESSOR ENTRIES FOR FINANCING LEASE WITH A GUARANTEED RESIDUAL) The following facts pertain to a non-cancelable lease agreement between Ace Leasing Company and King Company, a lessee. Commencement of Lease Date January 1, 2020 Annual lease payment due at the beginning of the year beginning with January 1, 2020 $137,171 Residual value of equipment at end of lease term, guaranteed by lessee $54,000 Book Value of Lease Equipment on LESSOR books $500,000 Lease term 6 years Economic life of...
Problem 4: Assume the same facts as for Problem 3. A. For the lessor, is the lease a finance lease (sales-type) or an operating lease? Explain why or why not. B. Prepare the lessor's journal entries through 12/31/Yr1. Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the Lease 12/31/YO Annual lease payment (Payment 1 due immediately) $20,472 Bargain Purchase Option (Lessee expects to exercise) $4,000 Lease Term 5 years Economic Life...
Fox Financing, Inc. leased a drilling machine to lease to Guy Company. The noncancelable lease requires lease payments of $5,000 per year, payable in advance, over a four year period. There is a bargain purchase option of $10,000 for Guy. Fox's implicit interest rate (known to Guy) is 10 percent. The lease term begins on January 1, 2019. The machine's economic life is 10 years. The machine's book value is $22,000 and fair value $25,000. The collectability of the lease...
Assume that on December 31, 2016, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement: The agreement requires equal rental payments of $68,299 beginning on December 31, 2016 The fair value of the building on December 31, 2016 is $500,513 1. 2. The building has an estimated economic life of 12 years, a guaranteed residual value of $12,000, and an expected residual value of...
Indigo Corporation enters into a 7-year lease of equipment on
December 31, 2016, which requires 7 annual payments of $37,500
each, beginning December 31, 2016. In addition, Indigo guarantees
the lessor a residual value of $18,700 at the end of the lease.
However, Indigo believes it is probable that the expected residual
value at the end of the lease term will be $8,700. The equipment
has a useful life of 7 years. Prepare Indigos' December 31, 2016,
journal entries assuming...
1.
The Charleston Company purchases a machine on 1/1/18:
The book value at 12/31/20 will be:
Select one:
a. $16,250
b. $19,750
c. $17,000
d. $13,750
e. $22,500
2.
Given the following data:
Net Income is:
Select one:
a. Overstated $24
b. Understated $6
c. Overstated $16
d. Understated $15
e. Understated $14
3.
The Bozeman Company had current assets of $500 and current
liabilities of $400 prior to the following transactions:
1. Collection of an account receivable, $100
2....
Problem 3: The following facts pertain to a non-cancelable lease agreement between Lessee and Lessor: Date of the lease 12/31/YO Annual lease payment Payment 1 due immediately) $20,472 Bargain Purchase Option (lessee expects to exercise) $4,000 Lease Term 5 years Economic Life of Leased Asset 10 years Lessor's Cost of the asset $65,000 Fair Value of the asset $91.000 Lessor's Implicit Rate & Lessee's Incremental Borrowing Rate The collectability of the lease payments by Lessor is probable. A. For the...
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