Blossom Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain...

Blossom Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement.

1.		The lease term is 6 years, with equal annual rental payments of $3,410 at the beginning of each year.
2.		Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.
3.		The building has a fair value of $18,900, a book value to Blossom of $11,900, and a useful life of 7 years.
4.		At the end of the lease term, Blossom and Walsh expect there to be an unguaranteed residual value of $2,975.
5.		Blossom wants to earn a return of 8% on the lease, and collectibility of the payments is probable. This rate is known by Walsh.

(b) Using the original facts of the lease, show the journal entries to be made by both Blossom and Walsh in 2020. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Expert Solution

ekkarill92 answered 1 year ago

Crane Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain...

Crane Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 4 years, with equal annual rental payments of $4,056 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $16,200, a book value to...

Carla Vista Company leases a building to Walsh, Inc. on January 1, 2020. The following facts...

Carla Vista Company leases a building to Walsh, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 4 years, with equal annual rental payments of $4,429 at the beginning of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $17,500, a book value...

Teal Mountain Corporation leases a building to Sandhill, Inc. on January 1, 2020. The following facts...

Teal Mountain Corporation leases a building to Sandhill, Inc. on January 1, 2020. The following facts pertain to the lease agreement. 1. The lease term is 10 years with equal annual rental payments of $3,824 at the end of each year. 2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 3. The building has a fair value of $34,900, a book value...

Blossom Incorporated leases a piece of machinery to Pina Company on January 1, 2020, under the...

Blossom Incorporated leases a piece of machinery to Pina Company on January 1, 2020, under the following terms. 1. The lease is to be for 4 years with rental payments of $15,557 to be made at the beginning of each year. 2. The machinery’ has a fair value of $81,480, a book value of $60,800, and an economic life of 10 years. 3. At the end of the lease term, both parties expect the machinery to have a residual value...

The following information is available for Blossom Company. 1. Purchased a copyright on January 1, 2020...

The following information is available for Blossom Company. 1. Purchased a copyright on January 1, 2020 for $54,000. It is estimated to have a 10-year life. 2. On July 1, 2020, legal fees for successful defense of the copyright purchased on January 1, 2020, were $15,390. Prepare the journal entries to record all the events related to the copyright during 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and...

On January 1, 2020, Blossom Company makes the two following acquisitions. 1. Purchases land having a...

On January 1, 2020, Blossom Company makes the two following acquisitions. 1. Purchases land having a fair value of $160,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $251,763. 2. Purchases equipment by issuing a 7%, 8-year promissory note having a maturity value of $270,000 (interest payable annually). The company has to pay 12% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Blossom Company for the two...

Ingenuous Company acquired a building on January 1, 2020 for P9,000,000. At that date, the building...

Ingenuous Company acquired a building on January 1, 2020 for P9,000,000. At that date, the building had a useful life of 30 years. On December 31, 2020, the fair value of the building was P9,600,000 and on December 31, 2021, the fair value is P9,800,000. The building was classified as an investment property and accounted for under the cost model. What amounts should be carried in the statement of financial position and recognized in profit or loss for 2021?

On January 1, 2020, Blossom Inc. agrees to buy 3 kg of gold at $32,000 per...

On January 1, 2020, Blossom Inc. agrees to buy 3 kg of gold at $32,000 per kilogram from Golden Corp on April 1, 2020, but does not intend to take delivery of the gold. On the day that the contract was entered into, the fair value of this futures contract that trades on the Futures Exchange was zero. On January 1, 2020, Blossom is required to deposit $66 with the stockbroker as a margin. The fair value of the futures...

Blossom Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The...

Blossom Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $32,207 at the beginning of each year. The first payment is received on January 1, 2020. Blossom had purchased the machine during 2016 for $146,000. Collectibility of lease payments by Blossom is probable. Blossom set the annual rental to ensure a 6% rate of return. The machine has an economic life of...

Sunland Incorporated leases a piece of machinery to Culver Company on January 1, 2020, under the...

Sunland Incorporated leases a piece of machinery to Culver Company on January 1, 2020, under the following terms. 1. The lease is to be for 4 years with rental payments of $14,999 to be made at the beginning of each year. 2. The machinery’ has a fair value of $78,692, a book value of $58,720, and an economic life of 10 years. 3. At the end of the lease term, both parties expect the machinery to have a residual value...

Question