Houston pumps recently reported $185,250 of sales, $140,500 of operating costs other than depreciation, and $9,250 of depreciati
2 answers:
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Answer and Explanation:
1. The computation of lease receivable is shown below:-
Amount of Lease Receivable = Present value amount i.e calculated by using the present value formula shown in the spreadsheet
Given that
Rate = 8%
NPER = 7 years
PMT = $26,143
FV = $0
The formula is
= -PV(RATE;NPER;PMT;FV;TYPE)
After applying this above formula, the present value is $146,998.94
2. Now The Journal entry is shown below:-
a. Lease Receivable A/c Dr, $146,998.94
Cost of Goods Sold Dr, $75,000
To Inventory A/c $75,000
To Sales $146,998.94
(Being lease receivable is recorded)
Here we debited the lease receivables and cost of goods sold as it increased the assets and expenses and we credited the inventory and sales as it reduced the assets and increased the revenues
b. Cash A/c Dr, $26,143
To Lease receivable A/c $26,143
(Being the first payment of lease is recorded)
For recording this we debited the cash as it increased the sales and credited the lease receivables as it decreased the assets
c. Interest Receivable A/c Dr, $9,668.432 {($146,998.4 - $26,143) × 8%}
To Interest Income A/c $9,668.432
(Being accrued interest is recorded)
For recording this we debited the cash as it increased the sales and credited the interest income and it increased the revenue
