Question

- Your answer is partially correct On January 1, 2020, Swifty Animation sold a truck to Peete Finance for $49,000 and immediately leased it back. The truck was carried on Swifty's books at $43.000 The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Swifty at lease-end. The lease requires three equal rental payments of $14.900 at the end of each year (first payment on January 1, 2021). The appropriate rate of interest is 5%, the truck has a useful life of 5 years, and the residual value at the end of the lease term is expected to be $14,000, none of which is guaranteed Prepare Swifty's 2020 journal entries. (Credit account titles are automatically indented when the amount is entered. Do not Indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to decimal places, 3.5,265. Record journal entries in the order presented in the problem.) Click here to view factor tables Debit Credit Date 1/1/20 Account Titles and Explanation Cash 43000 Trucks 6000 Gain on Disposal of Plant Assets (To record sale of truck) Right-of-Use Asset 1/1/20 Le bly

Answer 1

Answer Page No 0 Credit $43000 $ 6000 Dewoit tilata 2020 jewinal enties Date Particular Debit 411) 2020 Cash $ 49000 Truchs Gaison disposal of plantasch C to record sale of truch) 111/2020 Right of use asset $40,576 Lease liability (To record lease liability) 12/312020 hease expense $14,900 hease liability Right of use assets $40,576 $ 2029 $12,871 Present value of rental payments = $14,900 x '- 5% = $14,900 X 2.72325 = $40576 Lease liabilily = $ 40,576 X 5% - $ 2029 Right of use assets = 14,900 – 2029 = $ 12,871