Answered

Westonci.ca makes finding answers easy, with a community of experts ready to provide you with the information you seek. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform. Get detailed and accurate answers to your questions from a dedicated community of experts on our 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)

Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Stay curious and keep coming back to Westonci.ca for answers to all your burning questions.