Homework Answers
| a. | Journal entry: | ||||||||||
| Date | Account titles and explanation | Debit | Credit | ||||||||
| Equipment | 30000 | ||||||||||
| Note payable | 30000 | ||||||||||
| (Purchase of delivery truck) | |||||||||||
| Horizontal statement model | |||||||||||
| Event | Balance sheet | Income statement | |||||||||
| Assets | = | Liabilities | + | Equity | Revenue | - | Expenses | = | Net income | ||
| Equipment | = | Note payable | + |
Retained earnings |
|||||||
| 30000 | 30000 | 0 | 0 | 0 | 0 | ||||||
| b. | Present value of future lease payments=Lease rental*Discount factor at 12% for 6 years=7297*4.1114=$ 30000 | ||||||||||
| Journal entry: | |||||||||||
| Date | Account titles and explanation | Debit | Credit | ||||||||
| Equipment | 30000 | ||||||||||
| Lease payable | 30000 | ||||||||||
| (Purchase of delivery truck) | |||||||||||
| Horizontal statement model | |||||||||||
| Event | Balance sheet | Income statement | |||||||||
| Assets | = | Liabilities | + | Equity | Revenue | - | Expenses | = | Net income | ||
| Equipment | = | Lease payable | + |
Retained earnings |
|||||||
| 30000 | 30000 | 0 | 0 | 0 | 0 | ||||||
| c. | Journal entry: | ||||||||||
| Date | Account titles and explanation | Debit | Credit | ||||||||
| Interest expense | (30000*12%) | 3600 | |||||||||
| Lease payable | (7297-3600) | 3697 | |||||||||
| Cash | 7297 | ||||||||||
| (Annal lease rental paid) | |||||||||||
| Horizontal statement model | |||||||||||
| Event | Balance sheet | Income statement | |||||||||
| Assets | = | Liabilities | + | Equity | Revenue | - | Expenses | = | Net income | ||
| Equipment | = | Lease payable | + |
Retained earnings |
|||||||
| -7297 | -3697 | -3600 | 0 | 3600 | -3600 | ||||||
| d. | Income statement (Partial) | ||||||||||
| $ | |||||||||||
| Interest expense | 3600 | ||||||||||
| e. | Annual payments for the note payable=Value of the note/Discount factor at 12% for 6 years=30000/4.1114=$ 7297 | ||||||||||
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TABLE 6.5 FACTORS FOR CALCULATING THE PRESENT VALUE OF AN ANNUITY OF SI Discount Rate 2%...
TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT VALUE OF $1 Discount Rate No. of Periods 2%...
TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT VALUE OF $1 Discount Rate No. of Periods 2% 0.980 0.961 0.942 0.924 0.906 4% 0.9615 0.9246 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 6% 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 0.5584 8% 0.9259 0.8573 0.7938 0.7350 0.6806 10% 0.9091 0.8264 0.7513 0.6830 0.6209 12% 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 14% 0.8772 0.7695 0.6750 0.5921 0.5194 16% 0.8621 0.7432 0.6407 0.5523 0.4761 18% 0.8475...
ABC signed a 5-year operating lease agreement whereby WXY Rentals will provide a truck which cost...
ABC signed a 5-year operating lease agreement whereby WXY Rentals will provide a truck which cost WXY $20,000. The lease payments are $2,500, payable at the end of each year. The truck will revert to WXY at the end of five years. The truck has a 10-year useful life. At the inception of the lease, what should ABC do? O Make no journal entry O Record rental expense of $2,500 for the first year's rental O Record the lease asset...
Using a present value table, your calculator, or a computer program present value function, answer the...
Using a present value table, your calculator, or a computer program present value function, answer the following questions: See Tabl. 6-4 and Table 6-5 (Use the appropriate factor by clicking on the appropriate Table links.) Required: a. What is the present value of nine annual cash payments of $3,000, to be paid at the end of each year using an interest rate of 6%? b. What is the present value of $30,000 to be paid at the end of 22...
TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT VALUE OF $1 Discount Rate No. of Periods 2%...
TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT VALUE OF $1 Discount Rate No. of Periods 2% 4°10 6% 8% 10% 12% 1 4% 1 6% 18% 20% 0.980 0.9615 0.9434 0.9259 0.9091 0.8929 0.8772 0.8621 0.8475 0.8333 0.961 0.9246 0.8900 0.8573 0.8264 0.7972 0.7695 0.7432 0.7182 0.6944 0.942 0.8890 0.8396 0.7938 0.7513 0.7118 0.6750 0.6407 0.6086 0.5787 0.924 0.8548 0.7921 0.7350 0.6830 0.6355 0.5921 0.906 0.8219 0.7473 0.6806 0.6209 0.5674 0.5194 0.4761 0.888 0.7903 0.7050 0.6302 0.5645 0.5066 0.4556 0.4104...
Using the appropriate present value table and assuming a 2% annual market interest rate, determine the...
Using the appropriate present value table and assuming a 2% annual market interest rate, determine the present value, of a 3 year note with the face value of $5,000, and stated interest rate of 4%, with annual interest payments. Your firm agrees to the lend money to your supplier at the present value of the above note receivable. Write down the journal entries to record the initiation of such a loan at the calculated present value. Step 1: determine the...
e. Assume that a machine was purchased for $53,700. Cash of $24,500 was paid, and a...
e. Assume that a machine was purchased for $53,700. Cash of $24,500 was paid, and a four-year, 8% note payable was signed for the balance. 1. Prepare the horizontal model and record the journal entry, to show the purchase of the machine as described. 2. How much is the equal annual payment of principal and interest due at the end of each year? 3. What is the total amount of interest expense that will be reported over the life of...
can someone please explain how they got these answers thanks so much. Multiple Choice Questions 1....
can someone please explain how they got these answers thanks
so much.
Multiple Choice Questions 1. CDE leased equipment from HIJ on December 31, 20x11, for a 10-year period (also the useful life of the asset). Equal annual payments under the lease are $30.000 and are due on December 31 of each year. The first payment was made on December 31, 20x11, and the second payment was made on the next due date December 31, 20X12. The present value at...
2. Lessee accounting-finance lease Krause Company on January 1, 2018, enters into a nine-year noncancelable lease for equipment having an estimated useful life of 10 years and a fair value to the...
2. Lessee accounting-finance lease Krause Company on January 1, 2018, enters into a nine-year noncancelable lease for equipment having an estimated useful life of 10 years and a fair value to the lessor, Daly Corp., at the inception of the lease of $4,000,000. Krause's incremental borrowing rate is 8%. Krause uses the straight-line method to depreciate its assets. The lease contains the following provisions: 1. Rental payments of $266,000 for property taxes, payable at the beginning of each six-month period....
im sorry. this should be the first part of the question Required information The following information...
im sorry. this should be the first part of the question
Required information The following information appes to the questions displayed below On November 1, 2019, Wenger Co, padits landlord $3.00 in cash as an advance rent payment on its store location. The sik-month lease period ends on April 30, 2020, which time the contract may be renewed. Required: -1. Prepare the horizontal model to record the six month advanceret payment on November 1, 2019 (Use amounts with for increases...
Knowledge Check 01 On January 1 Year 1. Luring Company purchased equipment and agreed to make...
Knowledge Check 01 On January 1 Year 1. Luring Company purchased equipment and agreed to make a $10.000 cash payment on December 31, Year 5. At an interest rate of 12%, how much will the company need to deposit today to make the required cash payment on December 31, Year 5? Use Table E1. (Round your answer to 2 decimal places.) Present value S 5674 30 Knowledge Check 01 On January 1, Year 1. Barrett, Inc. purchased equipment and signed...
TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT VALUE OF $1 Discount Rate No. of Periods 2% 0.980 0.961 0.942 0.924 0.906 4% 0.9615 0.9246 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 6% 0.9434 0.8900 0.8396 0.7921 0.7473 0.7050 0.6651 0.6274 0.5919 0.5584 8% 0.9259 0.8573 0.7938 0.7350 0.6806 10% 0.9091 0.8264 0.7513 0.6830 0.6209 12% 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 14% 0.8772 0.7695 0.6750 0.5921 0.5194 16% 0.8621 0.7432 0.6407 0.5523 0.4761 18% 0.8475...
ABC signed a 5-year operating lease agreement whereby WXY Rentals will provide a truck which cost WXY $20,000. The lease payments are $2,500, payable at the end of each year. The truck will revert to WXY at the end of five years. The truck has a 10-year useful life. At the inception of the lease, what should ABC do? O Make no journal entry O Record rental expense of $2,500 for the first year's rental O Record the lease asset...
Using a present value table, your calculator, or a computer program present value function, answer the following questions: See Tabl. 6-4 and Table 6-5 (Use the appropriate factor by clicking on the appropriate Table links.) Required: a. What is the present value of nine annual cash payments of $3,000, to be paid at the end of each year using an interest rate of 6%? b. What is the present value of $30,000 to be paid at the end of 22...
TABLE 6.4 FACTORS FOR CALCULATING THE PRESENT VALUE OF $1 Discount Rate No. of Periods 2% 4°10 6% 8% 10% 12% 1 4% 1 6% 18% 20% 0.980 0.9615 0.9434 0.9259 0.9091 0.8929 0.8772 0.8621 0.8475 0.8333 0.961 0.9246 0.8900 0.8573 0.8264 0.7972 0.7695 0.7432 0.7182 0.6944 0.942 0.8890 0.8396 0.7938 0.7513 0.7118 0.6750 0.6407 0.6086 0.5787 0.924 0.8548 0.7921 0.7350 0.6830 0.6355 0.5921 0.906 0.8219 0.7473 0.6806 0.6209 0.5674 0.5194 0.4761 0.888 0.7903 0.7050 0.6302 0.5645 0.5066 0.4556 0.4104...
e. Assume that a machine was purchased for $53,700. Cash of $24,500 was paid, and a four-year, 8% note payable was signed for the balance. 1. Prepare the horizontal model and record the journal entry, to show the purchase of the machine as described. 2. How much is the equal annual payment of principal and interest due at the end of each year? 3. What is the total amount of interest expense that will be reported over the life of...
can someone please explain how they got these answers thanks
so much.
Multiple Choice Questions 1. CDE leased equipment from HIJ on December 31, 20x11, for a 10-year period (also the useful life of the asset). Equal annual payments under the lease are $30.000 and are due on December 31 of each year. The first payment was made on December 31, 20x11, and the second payment was made on the next due date December 31, 20X12. The present value at...
2. Lessee accounting-finance lease Krause Company on January 1, 2018, enters into a nine-year noncancelable lease for equipment having an estimated useful life of 10 years and a fair value to the lessor, Daly Corp., at the inception of the lease of $4,000,000. Krause's incremental borrowing rate is 8%. Krause uses the straight-line method to depreciate its assets. The lease contains the following provisions: 1. Rental payments of $266,000 for property taxes, payable at the beginning of each six-month period....
im sorry. this should be the first part of the question
Required information The following information appes to the questions displayed below On November 1, 2019, Wenger Co, padits landlord $3.00 in cash as an advance rent payment on its store location. The sik-month lease period ends on April 30, 2020, which time the contract may be renewed. Required: -1. Prepare the horizontal model to record the six month advanceret payment on November 1, 2019 (Use amounts with for increases...
Knowledge Check 01 On January 1 Year 1. Luring Company purchased equipment and agreed to make a $10.000 cash payment on December 31, Year 5. At an interest rate of 12%, how much will the company need to deposit today to make the required cash payment on December 31, Year 5? Use Table E1. (Round your answer to 2 decimal places.) Present value S 5674 30 Knowledge Check 01 On January 1, Year 1. Barrett, Inc. purchased equipment and signed...
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