Question

Part 1) Amortization schedule

Part 2) Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31 and reversing entries are used when appropriate. All executory costs are paid as incurred. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,971.)

Problem 21-6 The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Blossom Company, a lessee. Inception date Annual lease payment due at the beginning of January 1, 2017 $130,993 $54,000 each year, beginning with January 1, 2017 Residual value of equipment at end of lease term, guaranteed by the lessee Lease term Economic life of leased equipment Fair value of asset at January 1, 2017 Lessor's implicit rate Lessee's incremental borrowing rate 6 years 6 years $644,000 11% 11% The lessee assumes responsibility for all executory costs, which are expected to amount to $4,700 per year. The asset will revert to the lessor at the end of the lease term. The lessee has guaranteed the lessor a residual value of $54,000. The lessee uses the straight-line depreciation method for all equipment. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decima places e.g. 58,971.) BLOSSOM COMPANY (Lessee) Lease Amortization Schedule Annual Lease Interest on Reduction of Lease Liability Date Payment Plus GRV Liability Lease Liability 1/1/20 1/1/21 1/1/22 12/31/22

Answer 1

Datt_ teate Commencement Janna 1, 2017 130,993 paidot begi Arquat leate Dayments uarantees Rsidual Valne,0 6 Hears $646, 600 6-11% lease texmm Fair Value f Asef Implieit Rate of위nnual Cease payment ; lease payment xPvAF -ナブ $130,993 x (it 3.G9S89) | 61S, 129 $5, c00 X0.53v69 28, 81@! Pof Res dual Lease ltabity PV of Aprual leate payment pv 아-Annual lease 28, 87/ 61S, 129, t $6u4,0oo Depveiation ニ$ 98, 333

Blossom Company (lessee) Interef on Redou fior 串644,000 串513,000 438, 438 $ 355,673 $130,993 $14,562 130, 193 $130,993 5%,43 4130,993 48, 228 82,765 9i, 869 | | | 12-31»- | ss,000 | -$5363 ,48,637 Totalf |$839,958 | 子,98,758 |千6Wyooo 24 串29,018 17, 80/ -$39,1 串130,993 ー30,993 よ130,99 3 120 串161,829 $101,975 $48,637 千侈3,192 | In the Cooth of Blo mpan Journal entr?es Account Tle Date Credrt & 12017Lease Equipment f6ce, o0o leate tlabi 串644,000 [M Yaord -the lease №btity) 130,993 Cash 130,943 Cro yeuord the Ist lease payment) e paynmen $ 98,333 tease qipment Cro yecord the clepreeiafon Expes) 98.333 Plaleen htYest Exp enSe vest payable CTO "retordㅢhe Interest accrued) 丨456,431

In the Books of Blossom Corm Tourmal Entries Debit (4) $74 , S62- s S6, 43 Credites) Date Account Titte 20 ntevest Payable $130, 993 Cash CTo relord the 2nd leare Payment) 千98,333 23118 epraciatfon Expense 12131) $18, 333 Leate equipment Yecorel the depreefation Epense) CTo $48, 228 1213118 | | 그nteYeft Expense 串48,221 Interest Payable (To recond the Intevest aterued)