In: Accounting
Metlock Leasing Company signs an agreement on January 1, 2020,
to lease equipment to Cole Company....
Metlock Leasing Company signs an agreement on January 1, 2020,
to lease equipment to Cole Company. The following information
relates to this agreement.
1. |
|
The term of the non-cancelable lease is 6 years with no renewal
option. The equipment has an estimated economic life of 6
years. |
2. |
|
The cost of the asset to the lessor is $240,000. The fair value
of the asset at January 1, 2020, is $240,000. |
3. |
|
The asset will revert to the lessor at the end of the lease
term, at which time the asset is expected to have a residual value
of $24,323, none of which is guaranteed. |
4. |
|
The agreement requires equal annual rental payments, beginning
on January 1, 2020. |
5. |
|
Collectibility of the lease payments by Metlock is
probable. |
|
|
|
|
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Assuming the lessor desires a 15% rate of return on its
investment, calculate the amount of the annual rental payment
required. (For calculation purposes, use 5 decimal
places as displayed in the factor table provided and the final
answer to 0 decimal places e.g. 5,275.)
Amount of the annual rental payment |
|
$enter the Amount of the annual rental payment in dollars |
METLOCK LEASING COMPANY (Lessor)
Lease Amortization Schedule. Prepare an amortization
schedule that is suitable for the lessor for the lease term.
(Round answers to 0 decimal places e.g.
5,275.)
|
Date
|
|
Annual Lease Payment Plus
URV
|
|
Interest on Lease
Receivable
|
|
Recovery of Lease
Receivable
|
|
Lease Receivable
|
1/1/20
|
|
$enter a dollar amount |
|
$enter a dollar amount |
|
$enter a dollar amount |
|
$enter a dollar amount |
1/1/20
|
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
1/1/21
|
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
1/1/22
|
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
1/1/23
|
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
1/1/24
|
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
1/1/25
|
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
12/31/25
|
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
|
enter a dollar amount |
|
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$enter a total amount for this column |
|
$enter a total amount for this column |
|
$enter a total amount for this column |
|
|
|
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Prepare all of the journal entries for the lessor for 2020 and
2021 to record the lease agreement, the receipt of lease payments,
and the recognition of revenue. Assume the lessor’s annual
accounting period ends on December 31, and it does not use
reversing entries.Record journal entries in the order
presented in the problem.)
choose the correct Date
|
Account Titles and Explanation
|
Debit
|
Credit
|
1/1/2012/31/201/1/2112/31/21
|
|
enter an account title To record the lease on January 1
2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title To record the lease on January 1
2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title To record the lease on January 1
2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title To record the lease on January 1
2017 |
enter a debit amount |
enter a credit amount |
|
(To record the lease)
|
|
|
1/1/2012/31/201/1/2112/31/21
|
enter an account title To record the receipt of lease payment
on January 1 2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title To record the receipt of lease payment
on January 1 2017 |
enter a debit amount |
enter a credit amount |
|
(To record the receipt of lease payment)
|
|
|
1/1/2012/31/201/1/2112/31/21
|
enter an account title for the journal entry on December 31
2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title for the journal entry on December 31
2017 |
enter a debit amount |
enter a credit amount |
1/1/2012/31/201/1/2112/31/21
|
enter an account title for the journal entry on January 1
2018 |
enter a debit amount |
enter a credit amount |
|
enter an account title for the journal entry on January 1
2018 |
enter a debit amount |
enter a credit amount |
1/1/2012/31/201/1/2112/31/21
|
enter an account title for the journal entry on December 31
2017 |
enter a debit amount |
enter a credit amount |
|
enter an account title for the journal entry on December 31
2017 |
enter a debit amount |
enter a credit amount |