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ValentinkaMS [17]
2 years ago
13

On January 1, Year 1, Samuel Company leases equipment from Lease Corp. The lease agreement specifies five annual payments of $50

,000, with the first payment due at lease signing (January 1, Year 1), and at each January 1 from Year 2 to Year 5. At the end of the lease term, the equipment will be returned to the lessor and is expected to have a residual value of $30,000. The estimated useful life of the equipment is six years. The interest rate in the financing arrangement is 6%. The cost to Lease Corp of manufacturing the equipment is $150,000. The journal entry for the Lessor on January 1, Year 1 will include __________-
Business
1 answer:
Marrrta [24]2 years ago
4 0

Answer:

Cash (Dr.) $50,000

Lease Receivable (Cr.) $50,000

Explanation:

Lessor is the person who leases the item to gain financial benefit from the asset user lease. Lessee is a person who uses the assets but does not owns it so he pays lease rentals. In the given scenario the lease recoding at inception in the lessor books will be cash debit and lease receivable credit.

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Read 2 more answers
UNEVEN CASH FLOW STREAM
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Answer:

                        Present Value

Stream A                $1,251.247

Stream B                 $1,300.316

Explanation:

<em>The present value  of a future sum is the amount that would be invested today at the prevailing interest rate to have the sum</em>

Stream A

(100 × 1.08^9-1) + (400× 1.08^-2) + (400× 1.08^-3) + (400× 1.08^-4) + (300× 1.08^-5) = $1,251.247

Stream B

(300 × 1.08^9-1) + (400× 1.08^-2) + (400× 1.08^-3) + (400× 1.08^-4) + (100× 1.08^-5) = $1,300.316

                          Present Value

Stream A                $1,251.247

Stream B                 $1,300.316

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