On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $423,414 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2024, to be $60,000. Negotiations led to Maywood guaranteeing a $85,000 residual value.
Equal payments under the lease are $120,000 and are due on
December 31 of each year with the first payment being made on
December 31, 2021. Maywood is aware that Aqua used a 7% interest
rate when calculating lease payments. (FV of $1, PV of $1, FVA of
$1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate
factor(s) from the tables provided.)
Required:
1. & 2. Prepare the appropriate entries for
Maywood on January 1, 2021 and December 31, 2021, related to the
lease. (If no entry is required for a transaction/event,
select "No journal entry required" in the first account field.
Round your final answers to the nearest whole
dollar.)
Period | Lease Payment | PV Factor | Present |
& Probable residual value | @ 7% | Value $ | |
1 | 120,000 | 0.93458 | 112,150 |
2 | 120,000 | 0.87344 | 104,813 |
3 | 120,000 | 0.81630 | 97,956 |
3 | *25,000 | 0.81630 | 20,407 |
Total | 385,000 | 335,325 | |
* 25,000 ( 85,000 - 60,000 ) | |||
No. | Date | General Journal | Debit $ | Credit $ |
1 | January 01,2021 | Right of use asset | 335,325 | |
Lease payable | 335,325 | |||
2 | December 31,2021 | Amortization Expense | 111,775 | |
Right of use asset | 111,775 | |||
(335,325 / 3 ) | ||||
3 | December 31,2021 | Interest Expense | 23,473 | |
(335,325 x 7% ) | ||||
Lease payable | 96,527 | |||
Cash | 120,000 | |||
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period...
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $430,152 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2024, to be $66,000. Negotiations led to Maywood guaranteeing a $94,000 residual value. Equal payments under the lease are $132,000 and are due on December...
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $416,676 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2024, to be $54,000. Negotiations led to Maywood guaranteeing a $76,000 residual value. Equal payments under the lease are $108,000 and are due on December...
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $413,307 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2024, to be $51,000. Negotiations led to Maywood guaranteeing a $71,500 residual value. Equal payments under the lease are $102,000 and are due on December...
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $412,184 and has an expected economic life of five years. Aqua expects the residual value at December 31, 2024, to be $50,000. Negotiations led to Maywood guaranteeing a $70,000 residual value. Equal payments under the lease are $100,000 and are due on December...
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $413,307 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2024, to be $51,000. Negotiations led to Maywood guaranteeing a $71,500 residual value. Equal payments under the lease are $102,000 and are due on December...
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $412,184 and has an expected economic life of five years. Aqua expects the residual value at December 31, 2024, to be $50,000. Negotiations led to Maywood guaranteeing a $70,000 residual value. Equal payments under the lease are $100,000 and are due on December...
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $412,184 and has an expected economic life of five years. Aqua expects the residual value at December 31, 2024, to be $50,000. Negotiations led to Maywood guaranteeing a $70,000 residual value. Equal payments under the lease are $100,000 and are due on December...
help me with the interest expense, please. On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a three-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $413,307 and has an expected economic life of four years. Aqua expects the residual value at December 31, 2024, to be $51,000. Negotiations led to Maywood guaranteeing a $71,500 residual value. Equal payments under the lease...
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a five-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $418,922 and has an expected economic life of six years. Aqua expects the residual value at December 31, 2024, to be $56,000. Negotiations led to Maywood guaranteeing a $79,000 residual value. Equal payments under the lease are $112,000 and are due on December 31...
On January 1, 2021, Nguyen Electronics leased equipment from Nevels Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Nevels. The equipment cost Nevels $844,309 and has an expected economic life of five years. Nevels expects the residual value at December 31, 2024, will be $108,000. Negotiations led to the lessee guaranteeing a $156,000 residual value. Equal payments under the lease are $208,000 and are due on December...