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
Rus_ich [418]
3 years ago
5

Wildhorse Corporation enters into a 6-year lease of equipment on December 31, 2019, which requires 6 annual payments of $40,100

each, beginning December 31, 2019. In addition, Wildhorse guarantees the lessor a residual value of $20,300 at the end of the lease. However, Wildhorse believes it is probable that the expected residual value at the end of the lease term will be $10,150. The equipment has a useful life of 6 years. Prepare Wild Horses' December 31, 2019, journal entries assuming the implicit rate of the lease is 11% and this is known to Wildhorse
Business
1 answer:
olga55 [171]3 years ago
3 0

Answer:

31-Dec-19

Dr. Lease receivables  $ 180,498

Cr. Sales revenue         $180,498

Dr. Cost of goods sold  $ 170,000

Cr. Inventory          $ 170,000

Explanation:

The lease is recorded on the present value of all the payment to be made in the future.

We will use the present value of annuity formula

Present value of Lease = P [ ( 1 - ( 1 + r )^-n ) / r ]

where

P = annual payment = $40,100

r = implicit rate = 11%

n = numbers of payments = 6 payments

Placing values in the formula

PV of Lease = $40,100 x [ ( 1 - ( 1 + 11% )^-6 ) / 11% ] = $169,645

Now calculate the present value of guarantee residual value

PV of guarantee residual value = $20,300 x ( 1 + 11%)^-6 = $10,853

Fair value of lease = Present value of Lease payment + Present value of guarantee residual value

Fair value of lease = $169,645 + $10,853 = $180,498

Cost of equipment will be recorded in the cost of goods sold and Inventory as well.

We will pass two separate journal entries first to record the lease receivable and second to record the cost of the equipment.

You might be interested in
The four general approaches that companies use to develop employees include: Question 41 options:
ad-work [718]
C. is the correct answer
8 0
3 years ago
1.4 The process of allocating a business function to a
ElenaW [278]
Outsourcing because a third party is someone who is not one of the main people involved in a business.
5 0
3 years ago
Are facial movements that convey emotional messages
Grace [21]

By observing a person's emotions one can identify the person's emotions.

7 0
1 year ago
_____ is the most common way to measure the standard of living in different countries. GDP per capita Nominal GDP Real GDP
Lady bird [3.3K]

The answer is GDP per capita. The Gross Domestic Product just shows the wealth of a nation as  a whole since GDP is the value measure of the all the final goods and services produced over a period of time by a country. GDP per capita shows the average wealth per person (hence involves dividing the GDP of a country by its population).

8 0
3 years ago
Read 2 more answers
A company assigns overhead using a plantwide rate. If total estimated manufacturing overhead is $900,000 and the total estimated
ozzi

Answer:

Overhead  application rate

= <u>Budgeted overhead</u>

  Budgeted machine hours

= <u>$900,000</u>

  30,000 hours

= $30 per machine hour

Overhead cost assigned to the product

= Overhead application rate x Actual machine hours  

= $30 x 12,000 hours

= $360,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

Explanation:

In this case, there is need to determine the overhead application rate, which is the ratio of budgeted overhead to budgeted machine hours.

Then, we will obtain the overhead cost assigned to the product by multiplying the overhead application rate by actual machine hours.

3 0
3 years ago
Other questions:
  • On December 31, 2020, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative
    15·1 answer
  • The revenues and expenses of Paradise Travel Service for the year ended May 31, 20Y6, follow:
    8·1 answer
  • A recent college graduate from Clayton State University has the choice of buying a new car for $33,500 or investing the money fo
    8·1 answer
  • Testbank Multiple Choice Question 59 Incorrect answer. Your answer is incorrect. Try again. Blossom Co. at the end of 2020, its
    6·1 answer
  • The​ company, suppliers,​ distributors, and customers who open double quote partnerclose double quote with one another to improv
    7·1 answer
  • Decathlon Corp., a sports shoe manufacturer, launches a new line of sports shoes. To promote the product, Decathlon Corp. invite
    14·1 answer
  • At the beginning of the year (January 1), Buffalo Drilling has $10,000 of common stock outstanding and retained earnings of $7,0
    8·1 answer
  • 12. Taxes can have all of the following economic effects EXCEPT
    11·1 answer
  • Gordon is a new divisional manager at AskSocrates. In reorganizing his division, he must make some decisions regarding the span
    12·1 answer
  • connect academy contracts with states to provide virtual public education. at connect academy, the work groups are divided into
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!