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mario62 [17]
3 years ago
5

Amdahl, Inc. leases a piece of equipment from BFF on January 1, 2018. The lease agreement calls for 5 annual payments of $33,000

to be paid by Amdahl at the beginning of the year (starting with 2018). Ownership of the equipment will transfer to Amdahl at the end of the fifth year. The explicit rate on this lease is 8%.
1. Prepare Amdhal's journal entries on January 1, 2018.
Business
1 answer:
Furkat [3]3 years ago
7 0

Answer:

See explainations below

Explanation:

There will be changes in both balance sheet and income statement:

1. Balance sheet:

At, January 1, 2018 both asset and liability will increase by the amount equal to present value of all lease payments:

Present value of all lease payments = 33,000 + 33,000/(1 + 8%) + ... + 33,000/(1 + 8%)^4 = 142,300.19

2. Profit and loss statement:

At, January 1, 2018 interest expense will increase by the amount equal to present value of all lease payments multiplied by the interest rate, or: 142,300.19 x 8% = 11,384.01

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A corporation purchased manufacturing equipment for $100,000, with an estimated useful life of 10 years and a salvage value of $
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6 0
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8 0
3 years ago
Mike has one hour to spend at the gym where he will jog, play handball and cycle. jogging uses 10 calories per minute, handball
slega [8]
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z = minutes used for cycling

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