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
IrinaK [193]
3 years ago
8

Teal Mountain Leasing Company signs a lease agreement on January 1, 2020, to lease electronic equipment to Sandhill Company. The

term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:
1. Sandhill has the option to purchase the equipment for $19,500 upon termination of the lease. It is not reasonably certain that Sandhill will exercise this option.
2. The equipment has a cost of $190,000 and fair value of $238,500 to Teal Mountain Leasing. The useful economic life is 2 years, with an unguaranteed residual value of $19,500.
3. Teal Mountain Leasing desires to earn a return of 5% on its investment.
4. Collectibility of the payments by Teal Mountain Leasing is probable.
Prepare the journal entries on the books of Teal Mountain Leasing to reflect the payments received under the lease and to recognize income for the years 2017 and 2018.
Business
1 answer:
juin [17]3 years ago
7 0

Answer:

Fair value                            $238,500

Less: PV of residual value <u>$17,687    </u> (19500*0.90703)

PV of lease payment          <u>$220,813 </u>

<u />

Annual lease = 220813/1.85941

Annual lease = $118,754

Date    Account titles and Explanation               Debit         Credit

1/1/17    Lease receivables                                    $238,500

            Cost of goods sold                                  $172,313

                    Sales                                                                    $220,813

                    Inventory                                                              $190,000

            (To record the lease)

12/31/17 Cash                                                          $118,754

                   Lease receivables                                                 $106,829

                   Interest revenue(238,500*5%)                             $11,925

              (To record the receipts of lease installments)

12/31/18  Cash                                                          $118,754

                   Lease receivables                                                 $112,170

                   Interest revenue(238,500-106829*5%)               $6,584

              (To record the receipts of lease installments)

12/31/18  Cash                                                          $19,500

                   Lease receivables                                                 $19,500

             (To record sales of equipment at the end of the lease)

You might be interested in
Quality Air Conditioning manufactures three home air conditioners: an economy model, a standard model, and a deluxe model. The p
Genrish500 [490]

Answer:

Detailed solution is given below:

7 0
3 years ago
Owner Shan Mu is considering franchising her Noodles by Mu restaurant concept. She believes people will pay $ 10.00 for a large
denpristay [2]

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

She believes people will pay $ 10.00 for a large bowl of noodles. Variable costs are $ 5.00 per bowl. Mu estimates monthly fixed costs for a franchise at $9,000

First, we need to calculate the break-even point in dollars:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 9,000/ [(10 - 5)/10]= $18,000

<u>To determine whether it is convenient to the franchisees, we need to calculate the margin of safety in dollars and, compare it to a break-even point in dollars with the desired income:</u>

<u />

Break-even point (dollars)= (fixed costs + desired income)/ contribution margin ratio

Break-even point (dollars)= (9,000 + 25,500) / 0.5= $69,000

Margin of safety=(current sales level - break-even point)

Margin of safety= 96,500 - 69,000= $27,500

It is a good business opportunity for franchisees.

8 0
3 years ago
Match the departments with task that they perform in the fulfillment process. Sales Accounting Warehouse
maw [93]

Answer:

C. Prepares and sends the invoice

Explanation:

4 0
3 years ago
How much milk does a holstein cow produce per year.
sashaice [31]

Answer:

About 2,900 gallons of milk per year according to the internet

7 0
2 years ago
Glascro Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the
omeli [17]

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Month - Lease cost - Machine hours

April: $15,000 - 800

May: $10,000 - 600

June: $12,000 - 770

July: $16,000 - 1,000

Using the high-low method, first, we need to determine the unitary variable cost. We need to use the following formula:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (16,000 - 10,000) / (1,000 - 600)

Variable cost per unit= $15 per unit

Now, we can calculate the fixed costs:

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 16,000- (15*1,000)

Fixed costs= $1,000

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 10,000 - (15*600)

Fixed costs= $1,000

6 0
3 years ago
Other questions:
  • When Raoul Welsh is evaluating the construction industry in terms of interest rates, employment cycles, and the rate of new home
    14·1 answer
  • "Free" items only cost the company that gives them away.<br> O A.<br> True<br> OB. False
    11·2 answers
  • Red, Jess, and Frankare coworkers at Crossroad Inc. Having worked at CI for five years now, the three are discussing their caree
    15·1 answer
  • 34. Consider a binary (digital) option on a stock currently trading at $100. The option pays a $1 if the stock price goes below
    13·1 answer
  • GM crops have raised issues among communities in which they are produced. Which of the following are concerns raised by the publ
    7·1 answer
  • "Roper Spring Water" is considering a new bottling line that costs $230,000, last 4 years, and yields cost savings of $55,000 in
    9·1 answer
  • What is the function of the audio tools on the Format contextual tab?
    12·2 answers
  • Question + answers in photo, please help!
    8·1 answer
  • 4 causes of small business failure​
    5·1 answer
  • Why is it important to file your income taxes before tax day? provide two reasons.
    14·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!