Question

Complete the following questions. In addition to answering the items below, you must submit an analysis of the assignment. Analyze the specific outcomes and write an analysis directed toward the team at Coco Inc. describing what the numbers mean and how they relate to the business. Submit journal entries in an Excel file and written segments in an MS Word document. For written answers, please make sure your responses are well-written, formatted per CSU-Global Guide to Writing and APA and have proper citations, if applicable. Assume that the following facts pertain to a non-cancelable lease agreement between Coco Inc. and Bubs, Corp, a Lessee.

Inception date January 1, 2017

Residual value of equipment at end of lease term, unguaranteed $50,000

Lease term 6 years

Economic life of leased equipment 8 years

Fair value of asset at January 1, 2017 $400,000

Lessor’s implicit rate 12%

Lessee’s incremental borrowing rate 10%

The lessee assumes responsibility for all executory costs, which are expected to amount to $2,000 per year. The asset will revert to the lessor at the end of the lease term. The lessee uses the straight-line depreciation method for all equipment.

Using the spreadsheet, Lease Amort Schedule found in the link below, prepare an amortization schedule that would be suitable for the lessee for the lease term.

Using the spreadsheet Journal Entries, prepare the journal entries for the lessee for 2017 and 2018 to record the lease agreement and all expenses related to the lease. Assume the Lessee’s annual accounting period ends on December 31 and that reversing entries are used when appropriate.

Calculations MUST be shown.

The template for answering is below:

Date		Lease Payment		Interest Expense		Reduction of Lease Liability		Balance of Lease Liability
January 1 2017								$400,000
January 1 2018
January 1 2019
January 1 2020
January 1 2021
January 1 2022
January 1 2023
December 31 2023

Prepare the journal entries to record the following.
Date	Account Title				Amount	Amount
	Account Title
Provide a one line explanation for the reason why the journal entry has been made.
Date	Account Title				Amount	Amount
	Account Title
Provide a one line explanation for the reason why the journal entry has been made.
Date	Account Title				Amount	Amount
	Account Title
Provide a one line explanation for the reason why the journal entry has been made.
Date	Account Title				Amount	Amount
	Account Title
Provide a one line explanation for the reason why the journal entry has been made.
Date	Account Title				Amount	Amount
	Account Title
Provide a one line explanation for the reason why the journal entry has been made.

Answer 1