Accounting WEEK 4: HOMEWORK

 
Please access the

Week 4 Homework Questions (Links to an external site.)Links to an external site.

document and

grading rubric (Links to an external site.)Links to an external site.

. In a Word document, include your name and type your answer to each question. Name your document and include your first and last initials of your name. For example, if your name is Jane Smith, the file name will be ACCT557_W4_HW_JS .

The grading rubric for the weekly homework can be found under Files.

Submit your assignment by the due date.

Homework – Week 4 – Chapter 21

Problem 1:

Kingdom Leasing Inc. agrees to lease jousting equipment to Knight Inc. on Jan 1, 2016. They agree on the following terms:
1) The normal selling price of the jousting equipment is $410000 and the cost of the asset to Kingdom Leasing Inc. was $250000.
2) Knight will pay all maintenance, insurance, and tax costs directly and annual payments of $60000 on Jan 1 each year.
3) The lease begins on Jan 1, 2016 and payments will be in equal annual installments.
4) The lease is noncancelable with no renewal option. The lease term is 10 years (the same as the estimated economic life).
5) At the end of the lease, the jousting ring will revert to Kingdom Leasing Inc. and have an unguaranteed residual value of $30000. Their implicit interest rate is 10%.
6) Kingdom Leasing, Inc. incurred costs of $6500 in negotiating and closing the lease. There are no uncertainties regarding additional costs yet to be incurred and the collectability of the lease payments is reasonably predictable.
	Required:
a) Determine what type of lease this would be for Kingdom Leasing Inc. and calculate the following: (Show all work.)
Lease Receivable
Sales Price
Cost of Sales
b) Prepare Kingdom’s amortization schedule for the lease terms.
c) Prepare all the journal entries for Kingdom for 2016. Assume a calendar year fiscal year.

Required:

Problem 2: Use the data given in Problem #1 and answer the required questions to record the lease in the Knight Inc.’s books.

a) Determine what type of lease this would be for the lessee and calculate the initial obligation.

b) Prepare Knight Inc.’s amortization schedule for the lease terms.

c) Prepare all the journal entries for Knight Inc. for 2016. Assume a calendar year fiscal year.

Rubric for Homework Problems

Criterion

Unsatisfactory

0–9

Needs Improvement

10–17

Meets Requirements

18–22

Points earned

0–22

Content and Development

80%
 

Content is incomplete or omits significant requirements.
Major points are not clear or persuasive. Does not indicate a basic understanding of chapter concepts.

Content is not comprehensive.
Major points are addressed, but not well supported. Basic understanding of chapter concepts, but not appears to have been mastered.
Some theoretical errors in submission.

Content is comprehensive, accurate, and persuasive.
Major points are stated clearly and are well supported. Student has mastered chapter concepts and correctly and clearly completed the assignment.

Comments

Criterion

Unsatisfactory

0

Needs Improvement

1–2

Meets Requirements

3–4

Points earned

0–4

Format and

Appearance

10%

Not submitted in Excel format.
No apparent attempt to format for readability. Hard to follow or determine answer. No conclusion or indication of where to find the answer or conclusion for each requirement.

Not a professional submission. Data just typed without any organization or format. No white space or graphics or formatting.
Unable to clearly identify where the answer to each problem requirement is presented.

Submission appropriate to present in a business or professional context. Excellent use of graphics and formatting.
Answer to each problem requirement clearly indicated.

Comments

Criterion

Unsatisfactory

0

Needs Improvement

1–2

Meets Requirements

3–4

Points earned

0–4

Calculations

10%

Not all answers properly supported. Difficult to determine from where the numbers were derived.
No audit trail.

Most necessary calculations included, but no formulas or explanation of how derived. Typed in hard number format rather than using a formula in the cell.

All required calculations clearly shown either as a label or comment or as a formula within the cell. Excellent audit trail.

Comments

Total Score