Question

On January 1, 2021, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Allied. The equipment cost Allied $973,000 and has an expected useful life of five years. Allied expects the residual value at December 31, 2024, will be $317,000. Negotiations led to the lessee guaranteeing a $374,000 residual value.

Equal payments under the finance/sales-type lease are $217,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Karrier is aware that Allied used a 9% 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. Prepare the appropriate entries for both Karrier and Allied on January 1, 2021, to record the lease.
2. Prepare all appropriate entries for both Karrier and Allied on December 31, 2021, related to the lease.

On January 1, 2021, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Allied. The equipment cost Allied $973,000 and has an expected useful life of five years. Allied expects the residual value at December 31, 2024, will be $317.000. Negotiations led to the lessee guaranteeing a $374,000 residual value. Equal payments under the finance/sales-type lease are $217,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Karrier is aware that Allied used a 9% 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. Prepare the appropriate entries for both Karrier and Allied on January 1, 2021, to record the lease. 2. Prepare all appropriate entries for both Karrier and Allied on December 31, 2021, related to the lease. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate entries for both Karrier and Allied on January 1, 2021, to record the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar.)

Part 1

Part 2

I'm having trouble with these journal entries, but I believe they are correctly labeled. Thank you!

Answer 1

the 217000 X lease $1327213 Page 0 Appropriates Entries is 2021 Present value of 엉 lease payment for lease. - present value of periodic lease payment at Present Value q exuess legge guaranteed residual value 1-43909 +697400-317000) * (1+got = (219000x 51995) + 57000 X-4604 1300968.5 + 26244 Present value of lease payment for lessee present value of dease payment fore lesson. present value of periodic lease payment t residual value + present value of of excess lease guaranteed residual value present abre = 217000 +9% 14 94 + 319000 XL (1793) + 374000-317000) * (U+9754 (9400 - 1300969 + 145 956 + 2,6244 fease payment for lessor $ 1473169 Present value

Slino Page ② Date General Journal Jannaay | Right of Use Asset To leare payable Debit ($) Credit ($) 1327213 1327213 OI- 2020 1473169 Lecue . January 2 Receivable To Equipment 11473169 4, 2020 (2) ③ Approprente Entries an Dec-3., 2020 - 1327213x ay = $ 119449 Interest expense Amortizatus expense = 1327213 4 yeary Bests Home $ 331803 j Interest Reverne 1473169 x 9% = $132585

St no Date Credit General Townal resterest expense lease payable cals Debit $ 119449 Dec 31 2020 & 97551 219000 2 Dec 31 2020 Amortizatios espere *331803 To Right of Use aset & 331803 Casb 3 Dec 31 20" 217 000 To lease Receivable & 84415/ $ 84415 $132585 To Interest Revenne

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