Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Windsor Company. The following information relates to this agreement.
| 1. | The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. | |
| 2. | The fair value of the asset at January 1, 2020, is $59,000. | |
| 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 $4,000, none of which is guaranteed. | |
| 4. | The agreement requires equal annual rental payments of $19,211 to the lessor, beginning on January 1, 2020. | |
| 5. | The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee. | |
| 6. | Windsor uses the straight-line depreciation method for all equipment. |
(For calculation purposes, use 5 decimal places as
displayed in the factor table provided.)
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)
|
WINDSOR COMPANY (Lessee) |
||||||||
|---|---|---|---|---|---|---|---|---|
|
Date |
Annual Lease |
Interest on |
Reduction of Lease |
Lease Liability |
||||
|
1/1/20 |
||||||||
|
1/1/20 |
||||||||
|
1/1/21 |
||||||||
|
1/1/22 |
||||||||
Prepare all of the journal entries for the lessee for 2020 and 2021 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
enter an account title To record the lease |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record the lease |
enter a debit amount |
enter a credit amount |
|
|
(To record the lease) |
|||
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
|
|
(To record lease payment) |
|||
|
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
|
|
(To record interest expense) |
|||
|
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
|
|
(To record amortization of the right-of-use asset) |
|||
|
enter an account title To reverse interest expense |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To reverse interest expense |
enter a debit amount |
enter a credit amount |
|
|
(To reverse interest expense) |
|||
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
|
|
(To record lease payment) |
|||
|
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
|
|
(To record interest expense) |
|||
|
To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
|
|
(To record amortization of the right-of-use asset) |
In: Accounting
Kang Company was organized on April 1, 2020. The company
prepares quarterly financial statements. The adjusted trial balance
amounts at June 30 are shown below (amounts in millions).
|
Debit |
Credit |
|
Cash ₩ 6,700 |
Accumulated Depreciation – |
|
Accounts Receivable 600 |
Equipment ₩ 850 |
|
Prepaid Rent 900 |
Notes Payable 5,000 |
|
Supplies 1,000 |
Accounts Payable 1,510 |
|
Equipment 15,000 |
Salaries and Wages Payable 400 |
|
Dividends 600 |
Interest Payable 50 |
|
Salaries and Wages Expense 9,400 |
Unearned Rent Revenue 500 |
|
Rent Expense 1,500 |
Share Capital-Ordinary 14,000 |
|
Depreciation Expense 850 |
Service Revenue 14,200 |
|
Supplies Expense 200 |
Rent Revenue 800 |
|
Utilities Expense 510 |
|
|
Interest Expense 50 |
|
|
₩ 37,310 |
₩ 37,310 |
In: Accounting
Laura Leasing Company signs an agreement on January 1, 2020, to
lease equipment to Marigold Company. The following information
relates to this agreement.
| 1. | The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. | |
| 2. | The fair value of the asset at January 1, 2020, is $73,000. | |
| 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 $10,000, none of which is guaranteed. | |
| 4. | The agreement requires equal annual rental payments of $22,213.44 to the lessor, beginning on January 1, 2020. | |
| 5. | The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee. | |
| 6. | Marigold uses the straight-line depreciation method for all equipment. |
Prepare all of the journal entries for the lessee for 2020 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. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round answers to 2 decimal places, e.g. 5,265.25. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
In: Accounting
Laura Leasing Company signs an agreement on January 1, 2020, to
lease equipment to Novak Company. The following information relates
to this agreement.
|
1. |
The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. |
|
|
2. |
The fair value of the asset at January 1, 2020, is $74,000. |
|
|
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 $8,000, none of which is guaranteed. |
|
|
4. |
The agreement requires equal annual rental payments of $22,886.45 to the lessor, beginning on January 1, 2020. |
|
|
5. |
The lessee’s incremental borrowing rate is 4%. The lessor’s implicit rate is 3% and is unknown to the lessee. |
|
|
6. |
Novak uses the straight-line depreciation method for all equipment. |
Prepare all of the journal entries for the lessee for 2020 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. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round answers to 2 decimal places, e.g. 5,265.25. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
In: Accounting
Laura Leasing Company signs an agreement on January 1, 2020, to
lease equipment to Kingbird Company. The following information
relates to this agreement.
|
1. |
The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. |
|
|
2. |
The fair value of the asset at January 1, 2020, is $85,000. |
|
|
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 $5,000, none of which is guaranteed. |
|
|
4. |
The agreement requires equal annual rental payments of $27,911 to the lessor, beginning on January 1, 2020. |
|
|
5. |
The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee. |
|
|
6. |
Kingbird 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 answers to 0 decimal places, e.g. 5,265.)
Prepare all of the journal entries for the lessee for 2020 and 2021 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)
In: Accounting
Prepare a flexible budget for Oman Electro-Mechanical Company for the year 2020. The company has provided the following production data for the production of 10,000 units. Table Q5 shows the budgeted expenses for the specified production output. Based on the information given, you are required to prepare a budget for a production of 15,000 units for the same product of the company
Table Q5
|
Items |
Amount (OMR) |
|
Direct materials |
4,576 |
|
Direct labor |
2,029 |
|
Variable overhead expenses |
2,059 |
|
Fixed overheads |
1,611 |
|
Selling expenses (20% fixed, 80% variable) |
1,681 |
|
Administration expenses (fixed for all level of production) |
386 |
|
Distribution expenses (30% fixed, 70% variable) |
489 |
In: Operations Management
Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Larkspur Company. The following information relates to this agreement.
| 1. | The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. | |
| 2. | The fair value of the asset at January 1, 2020, is $66,000. | |
| 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 $5,000, none of which is guaranteed. | |
| 4. | The agreement requires equal annual rental payments of $21,328 to the lessor, beginning on January 1, 2020. | |
| 5. | The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee. | |
| 6. | Larkspur uses the straight-line depreciation method for all equipment. |
Click here to view factor tables.
(For calculation purposes, use 5 decimal places as
displayed in the factor table provided.)
Part 1
New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is partially correct.
Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)
|
LARKSPUR COMPANY (Lessee) |
||||||||
|---|---|---|---|---|---|---|---|---|
|
Date |
Annual Lease |
Interest on |
Reduction of Lease |
Lease Liability |
||||
|
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 |
||||
|
$enter a total amount for this column |
$enter a total amount for this column |
$enter a total amount for this column |
||||||
eTextbook and Media
List of Accounts
Part 2
New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is partially correct.
Prepare all of the journal entries for the lessee for 2020 and 2021 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
|---|---|---|---|---|
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record the lease |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record the lease |
enter a debit amount |
enter a credit amount |
||
|
(To record the lease) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
||
|
(To record lease payment) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
||
|
(To record interest expense) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
||
|
(To record amortization of the right-of-use asset) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To reverse interest expense |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To reverse interest expense |
enter a debit amount |
enter a credit amount |
||
|
(To reverse interest expense) |
||||
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
||
|
enter an account title To record lease payment |
enter a debit amount |
enter a credit amount |
||
|
(To record lease payment) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record interest expense |
enter a debit amount |
enter a credit amount |
||
|
(To record interest expense) |
||||
|
choose a transaction date1/1/2012/31/201/1/2112/31/21During 2020During 2021 1/1/2012/31/201/1/2112/31/21During 2020During 2021 |
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
|
|
enter an account title To record amortization of the right-of-use asset |
enter a debit amount |
enter a credit amount |
||
|
(To record amortization of the right-of-use asset) |
In: Accounting
Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The cost of new machinery for the new product line would be $644,000. The machinery has economic life of eight years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the machine. The new line would generate incremental sales of 70,000 units per year at variable cost per unit of $21 and fixed cost of $725,000 per year. Each unit can be sold for $37 in the first year. The sale price and cost are both expected to remain the same. The firm’s tax rate is 35 percent, and the rate of return required for this type of investment is 15 percent. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-10 percent. Calculate the best-case and worst-case NPV.
In: Finance
Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The cost of new machinery for the new product line would be $644,000. The machinery has economic life of eight years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the machine. The new line would generate incremental sales of 70,000 units per year at variable cost per unit of $21 and fixed cost of $725,000 per year. Each unit can be sold for $37 in the first year. The sale price and cost are both expected to remain the same. The firm’s tax rate is 35 percent, and the rate of return required for this type of investment is 15 percent. . . What is the sensitivity of NPV to changes in the sales quantity? What is the effect on NPV of a 500-unit decrease in projected sales.
In: Finance
|
1 yr. |
2 yr. |
3 yr. |
5 yr. |
7 yr. |
|
0.16% |
0.23% |
0.28% |
0.37% |
0.51% |
In: Finance