1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
klasskru [66]
2 years ago
5

*E21.23 (LO 5) (Sale-Leaseback) Assume that on January 1, 2020, Elmer's Restaurants sells a computer system to Liquidity Finance

Co. for $680,000 and immediately leases back the computer system. The relevant information is as follows. 1. The computer was carried on Elmer's books at a value of $600,000. 2. The term of the non-cancelable lease is 3 years; title will not transfer to Elmer's, and the expected residual value at the end of the lease is $450,000, all of which is unguaranteed. 3. The lease agreement requires equal rental payments of $115,970 at the beginning of each year. 4. The incremental borrowing rate for Elmer's is 8%. Elmer's is aware that Liquidity Finance set the annual rental to ensure a rate of return of 8%. 5. The computer has a fair value of $680,000 on January 1, 2020, and an estimated economic life of 10 years. Instructions Prepare the journal entries for both the lessee and the lessor for 2020 to reflect the sale and leaseback agreement.
Business
1 answer:
Dennis_Churaev [7]2 years ago
5 0

<u>Solution and Explanation:</u>

Date  General Journal                                 Debit  Credit  

January 1, 2017  Cash/Liquidity Finance Co.  680000    

 Computer system                                             600000  

 Profit on sale of computer system              80000  

To record the sale of computer systems          

January 1, 2017  Lease Rental                       115970    

 Cash                                                              115970  

To record the first lease rental of the lease                  Journal entries in the books of lesser(Liquidity Finance Co.)    

                                                               Amount in $  

Date  General Journal                                          Debit  Credit  

January 1, 2017  Computer system           680000    

 Cash/Elmer's Restaurants                            680000  

To record the purchase of computer systems        

January 1, 2017  Cash                               115970    

 Lease Rental Income                                             115970  

To record the first receipt towards lease rental of the lease      

December 31, 2017  Depreication on computer system 68000    

 Accumulated depreication on computer system           68000  

To record the depreication expense for the year    

 

You might be interested in
Which one of the following is not a function of​ money? A. Medium of exchange. B. Store of value. C. Open market operation. D. U
Lisa [10]

Answer:

The correct answer is C

Explanation:

Money is the term which is described as something which serves as exchange medium, store of value and a unit of accounting. It is a exchange medium in the terms, that the person will agree to receive it by making a transaction.

In short, when depositing the money into any financial institution like banks, then this states the store of value function of the money.

Therefore, the one which is not the function of money is that it has the operations in the open market.

3 0
2 years ago
An ethical issue is an identifiable problem, situation, or opportunity that requires a person or organization to choose from amo
xenn [34]

Answer:

True, an ethical issue is an identifiable problem/ situation or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical.

Explanation:

Ethical issues arise when a given decision scenario or activity creates a conflict with a society's moral principles. Both businesses and individuals can be involved in these conflicts and sometimes these conflicts can be legally dangerous as some alternative to solve them might breach a particular law.

4 0
3 years ago
Waterways Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrig
zmey [24]

Answer:

Explanation:

PREPARE COST OF GOODS MANUFACTURED :

Beginning work in process 42000

Raw material consumed

Beginning raw material 38000

Add : raw material purchase 184500

Less : Ending raw material (52700)

Raw material consumed 169800

DIrect labour 42000

Factory overhead

Factory supplies used 16800

Factory utilities 10200

Depreciation factory equipment 16800

Indirect labour 48000

Property taxes 5500

Reent factory equipment 47000

Repairs factory equipment 4500

Total manufacturing overhead 148800

Total manufacturing cost 360600

Less : Ending work in process (52700)

Cost of goods manufactured

INCOME STATEMENT :

Sales revenue 1350000

Cost of goods sold

Beginning finished goods inventory 72550

Cost of goods manufactured 349900

goods available for sale 422450

Less : endin finished goods inventory (68800)

Cost of goods olsld (353650)

Gross profit 996350

Less : advertising expenses (54000)

Less : selling commission (40500)

Less : dep on office equipment (2400)

Less : office suppplies used (1600)

Less : other administrative exp (72000)

Less : Salaries exp (325000) (495500)

Net income 500850

BALANCE SHEET CURRENT SECTION :

ASSETS

Current assets

Cash 260000

Account receivable 275000

Prepaid exp 41250

Inventory

Raw material 52700

Work in process 52700

Finished goods 68800 174200

Total current assets 750450

8 0
3 years ago
Consider the following case: John Smith is a archaeologist with a Ph.D. He has excavated sites across much of South America and
STatiana [176]

According to the case, the use of Ph.D. on the ads for hair care products by John Smith is considered an example of the fallacy of inappropriate expertise.

The provided statement is true.

<h3>What is a fallacy?</h3>

A fallacy is an unlawful statement that is used by someone in stating any reasoning or argument which can even be harmful to society.

In the given case, John is having Ph.D. degree in the archaeology field, and his attempt to use the word Ph.D. on the haircare goods marketed by him would be a fallacy in respect of inappropriate expertise. The fallacy could be the use of the Ph.D. word on ads and the inappropriate expertise is that he doesn't have any knowledge regarding skincare and dermatology area.

Therefore, this may create a harmful effect on the individuals who are buying them as it is not authorized by a dermatologist.

Learn more about the fallacy in the related link:

brainly.com/question/2516239

#SPJ1

5 0
2 years ago
On November 1, 2015, Elli Company declared a dividend of $3.00 per share. Elli Company has 20,000 shares of common stock outstan
Artemon [7]

Answer:

Option (b) is correct.

Explanation:

The Journal entries are as follows:

(i) On November 1, 2015

Retained Earnings [$3 × 20,000] A/c    Dr. $60,000

To Dividend Payable                                                   $60,000

(To record the declaration of dividend)

(ii) On November 30, 2015

Dividend Payable  A/c     Dr. $60,000

To cash A/c                                             $60,000

(To record the payment of dividend)

3 0
3 years ago
Other questions:
  • Insurance that pays all expenses generated by the insured activity is known as:
    10·1 answer
  • The sum of two numbers is 62 and their difference is 16.what is the larger of the two numbers?
    14·1 answer
  • Recently, a senior software engineer complained that his boss was always in the "command and control" mode: "He doesn't trust us
    14·1 answer
  • Bryant Company designs and builds fancy dining room tables for individual customers. On July 1, there were two jobs in process:
    15·1 answer
  • Often, international researchers must collect their own primary data because ________.
    15·1 answer
  • When marketing managers attempt to identify "Key Success Factors" they typically are engaged in the _________________ component
    8·1 answer
  • As reported by the Bureau of Labor Statistics, the CPI for Airfare in 2263 was 586.1 (using a base year of 1914 = 100). The CPI
    5·1 answer
  • Câu 1 Bản chất của quản trị chiến lược là phác thảo hình ảnh tương lai của doanh nghiệp trong lĩnh vực hoạt động trên cơ sở khai
    9·1 answer
  • If a buyer has an almost unlimited selection of products that are very difficult to differentiate between, this represents.
    9·1 answer
  • Azzura is comparing different cars and believes that the sedan has a better mix of benefits in relation to price than the sports
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!