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
STatiana [176]
3 years ago
10

Oriole Leasing Company leases a new machine to Sharrer Corporation. The machine has a cost of $65,000 and fair value of $87,000.

Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2017. Oriole expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, beginning December 31, 2017.
Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved. (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.)
Date
Rent Receipt/ Payment
Interest Revenue/ Expense
Reduction of Principal
Receivable/ Liability
1/1/17 $
$
$
$
12/31/17
12/31/18
12/31/19
Prepare the journal entry at commencement of the lease for Oriole. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
1/1/17
Prepare the journal entry at commencement of the lease for Sharrer. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
1/1/17
Prepare the journal entry at commencement of the lease for Sharrer, assuming (1) Sharrer does not know Oriole’s implicit rate (Sharrer’s incremental borrowing rate is 9%), and (2) Sharrer incurs initial directs costs of $9,500. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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.)
Date
Account Titles and Explanation
Debit
Credit
1/1/17
Business
1 answer:
Hatshy [7]3 years ago
6 0

Answer and Explanation:

1. The Preparation of amortization table is shown below:-

<u>Date                Rent payment    Interest       Reduction of    Liability </u>

<u>                                                    revenue           Principal </u>

01.01.2017             $0                    $0                     $0              $87,000

31.12.2017             $33.759           $6,960             $26,799    $60201

                                                    (87,000 × 8%)

31.12.2018             $33.759           $4,816              $28,943    $31,258

                                                   (60,201 × 8%)

31.12.2022            $33,759           $2,501               $31,258      $0

                                                   (32,258 × 8%)

Working note

The computation of the yearly lease amount is shown below:-

Period             Table value PV at 8%

1                             0.92593

2                            0.85734

3                            0.79383

Total                      2.57710

Lease rent              $33.759  

($87,000 ÷ 2.5771)

2. The Journal entry is shown below:-

Lease receivable Dr,  $87,000

Cost of goods sold Dr, $65,000

           To Sales                        $87,000

            To Inventory                 $65,000

(Being lease commenced is recorded)

3. The Journal entry is shown below:-

ROU assets Dr, (right of use) $87,000

           To lease liability $87,000

(Being ROU assets recognized is recorded)

4. ROU assets Dr, (right of use) $96,500

           To lease liability $87,000

            To Cash $9,500

(Being ROU assets recognized of direct costs is recorded)

You might be interested in
For an economy starting at potential output, a decrease in planned investment in the short run results in a(n):
Kruka [31]

Question:

For an economy starting at potential output, a decrease in autonomous expenditure in the short-run results in a(n):

A. increase in potential output

B. recessionary output gap

C. decrease in potential output

D.  expansionary output gap

Answer:

The correct answer is B

Explanation:

A decrease in autonomous expenditure shifts the Planned Aggregate Expenditure curve downward thus creating a lower equilibrium output.

PAE = C + Ip + G + NX

where

PAE  = Planned Aggregate Expenditure

C = consumption

Ip = Investment Spending

G = Government Spending

NX =  Net Export

If an economy has its output equal to its potential, this will create a reduction in short-run equilibrium output leading to a recessionary output gap.

Cheers!

6 0
3 years ago
What would be a barrier to a child’s mental development?
kirill [66]

Not having experiences that help them make good choices though out the rest of their lives. Also someone to guide them through times good and bad to help them make the right choices.

5 0
3 years ago
Why do you think companies felt that unions were "conspiracies that interfere with property rights"?
Dafna1 [17]
Companies felt that unions were conspiracies which interfere with property right because, unions usually challenge the employers about the working conditions of their workers and the manner the employers treat their workers; they fight for the rights of the worker. Because of this, employers usually do all they can to stop unions from forming.
7 0
3 years ago
Defamatory statements published on Internet bulletin boards, e-mails, and the like, are considered libel due to the somewhat per
uranmaximum [27]

Answer:

Sorry i can not answer it...

5 0
2 years ago
In a perfectly competitive market
lawyer [7]

Answer:

D. No seller can influence the price of the product

Explanation:

A perfect market for competition is a market which has a high level of competition.  

It has the following features-

1. With regard to the market, knowledge is perfect in this rivalry between producer and consumer.  

2. Free entry, and exit

3. Deals with same or homogeneous products

4. The buyers and sellers are more in this market

5. There is no transport cost

Moreover, the average revenue and the marginal revenue are equal.

So, the correct option is D.

6 0
3 years ago
Other questions:
  • Firm X is selling a vehicle with an MSRP of $30,000 and dealer discount of 10%. Unit cost is $20,000 and fixed costs are $1.4 bi
    7·1 answer
  • The fed buys $5 billion worth of treasury bonds on the open market
    11·1 answer
  • Why are benefits of the sale or purchase of bonds?
    7·1 answer
  • Montana Furniture Mart sold $120,000 of furniture on June 30 and accepted the customer's $120,000 10% 1-year note payable in exc
    14·1 answer
  • A city levies property taxes of $500,000 for its General Fund for a year and expects to collect all except the estimated uncolle
    10·1 answer
  • An investor interested in obtaining the benefit of professional portfolio management has been tracking a particular investment c
    9·1 answer
  • Combines technology with manual employee effort to identify trends, perform comparisons and highlight opportunities in supply ch
    14·1 answer
  • You invested $30,000 in BOA, $20,000 in Best Buy, and $50,000 in Harley-Davidson for your portfolio. Betas are 1.8, 1.05 and 1.5
    6·1 answer
  • Company officers will have direct involvement with their assigned personnel and should have knowledge of organizational policies
    12·1 answer
  • General-purpose financial statements are the product of:____.
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!