Answered

Discover the answers you need at Westonci.ca, a dynamic Q&A platform where knowledge is shared freely by a community of experts. Our platform provides a seamless experience for finding reliable answers from a knowledgeable network of professionals. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.

Assume that IBM leased equipment that was carried at a cost of $120,000 to Swander Company. The term of the lease is 6 years beginning December 31, 2019, with equal rental payments of $30,044 beginning December 31, 2019. The fair value of the equipment at commencement of the lease is $150,001. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Assume the sales-type lease was recorded at a present value of $150,001.
Prepare IBM’s December 31, 2016, journal entries at commencement of the lease.
December 31, 2016:
Account Name Debit Credit
December 31, 2016
Account Name Debit Credit

Sagot :

Tundexi

Answer:

Date           Account titles and Explanation     Debit          Credit

Dec 31, 19   Lease receivables                        $150,001

                   Cost of goods sold                       $120,000

                            Sales                                                           $150,001

                             Equipment                                                 $120,000

                    (To record the lease)

Dec 31, 19   Cash                                                $30,044

                              Lease receivables                                     $30,044

                   (To record the receipt of lease installment)

We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. We hope this was helpful. Please come back whenever you need more information or answers to your queries. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.