Question

Chapter 15 - Homework Seved 16 0.65 points Skipped On January 1, 2021, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 10% rate of return for providing long-term financing. The lease agreement specified the following: a. Ten annual payments of $75,000 beginning January 1, 2021, the beginning of the lease and each December 31 thereafter through 2029 b. The estimated useful life of the leased equipment is 10 years with no residual value. Its cost to NRC was $442,716. c. The lease qualifies as a finance lease/sales-type lease. d. A 10-year service agreement with Quality Maintenance Company was negotiated to provide maintenance of the equipment as required. Payments of $9,500 per year are specified, beginning January 1, 2021. NRC was to pay this cost as incurred, but lease payments reflect this expenditure. e. A partial amortization schedule, appropriate for both the lessee and lessor, follows: 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.) eBook Decrease in Balance Outstanding Balance Payments Effective Interest (108 * Outstanding balance 1/1/2021 12/31/2021 12/31/2022 References 65,500 65,500 65,500 442,716 337,216 349,138 318,882 65,500 27,778 30,556 0.1 (377,216) - 37,722 0.1 (349, 438) - 34,944 Required: 1. Prepare the appropriate entries for the lessee related to the lease on January 1, 2021 and December 31, 2021. 2. Prepare the appropriate entries for the lessor related to the lease on January 1, 2021 and December 31, 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate entries for the lessor related to the lease on January 1, 2021 and December 31, 2021. (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 < 3 1 2 > Record lease by lessor (include maintenance fee accrual). Note: Enter debits before credits.

Answer 1

Requirementi: Journal Entries for the Lessee: Date Accounts Titles and Explanation Debit Credit Jan. 1, 2021 $ 4,42,716 Right-of-use Asset Lease Liability (To record lease) $ 4,42,716 Jan. 1, 2021 $ 65,500 Lease Liability Cash (To record lease payment) $ 65,500 Dec. 31, 2021 $ $ 27,778 37,722 Lease Liability Interest Expense Cash (27778+37722) (To record lease payment) $ 65,500 Dec. 31, 2021 $ 44,272 Amortization Expense Right-of-use Asset (442716/10) (To record amortization) $ 44,272 Requirement2: Journal Entries for the Lessor: Date Accounts Titles and Explanation Debit Credit Jan. 1, 2021 $ 6,55,000 Lease Receivable Sales Revenue (To record lease payment) $ 6,55,000 Jan. 1, 2021 $ 65,500 Cash Lease Receivable (To record cash received) $ 65,500 Dec. 31, 2021 $ 65,500 Cash Lease Receivable (To record cash received) $ 65,500 * Kindly Comment down for any clarifications/ queries and please upvote.