Jain

Jain please check the problem i re-send to me please also i send you the continuation of the problems. is due tomorrow sat 021613.

On January 1, 2012, Adams Corporation signed a 7-year noncancelable lease for a machine. The terms of the lease called for Adams to make annual payments of $9,214 at the beginning of each year, starting January 1, 2012. The machine has an estimated useful life of 8

years

and a $5,480 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Adams uses the straight-line method of depreciation for all of its plant assets. Adams’s incremental borrowing rate is

11

%

, and the lessor’s implicit rate is unknown.

(b)

Your answer is correct.

Compute the present value of the minimum lease payments.
(Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

The present value of the minimum lease payments

$

Computation of present value of minimum lease payments: $9,214 x 5.23054

=

$48,194

This is the continuatiation of the problem above can you help me n send it back sat.021

6

13 thks

Prepare all necessary journal entries for Adams for this lease through January 1, 2013.
(Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 58,971.)

12/31/12

=

=

=

	Date	Account Titles and Explanation	Debit	Credit
1/1/12
(To record the lease.)
(To record first payment.)
	12/31/12
(To record depreciation.)
(To record interest.)
1/1/13
(To record second payament.)
Accumulated Depreciation—Capital Leases								=	($48,194 ÷ 7)	$6,885
Interest Payable	[($48,194 – $9,214) x 0.11]	$4,288

Wadkins Company, a machinery dealer, leased a machine to Romero Corporation on January 1, 2012. The lease is for an 8-year period and requires equal annual payments of $40,897 at the beginning of each year. The first payment is received on January 1, 2012. Wadkins had purchased the machine during 2011 for $172,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Wadkins. Wadkins set the annual rental to ensure an 10% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Wadkins at the termination of the lease.

(a)

Your answer is correct.

Compute the amount of the lease receivable.
(Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

The amount of the lease receivable

$

The amount of the lease receivable = $40,897 x 5.86842 = $240,001
Click here if you would like to Show Work for this question

(b)

Prepare all necessary journal entries for Wadkins for 2012.
(Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places e.g. 58,971.)

Date

Account Titles and Explanation

Debit

Credit

1/1/12

(To record the lease.)

(To record the first lease payment.)

12/31/12

Interest Revenue

= [($240,001 – $40,897) x 0.10] = $19,910

Your answer is partially correct. Try again.

The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system.

6

years

11

%

Inception date	October 1, 2012
Lease term		6		years
Economic life of leased equipment
Fair value of asset at October 1, 2012			$317,912
Residual value at end of lease term		–0–
Lessor’s implicit rate		11		%
Lessee’s incremental borrowing rate
Annual lease payment due at the beginning of
each year, beginning with October 1, 2012		$ 67,700

The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs, which amount to $5,220 per year and are to be paid each October 1, beginning October 1, 2012. (This $5,220 is not included in the rental payment of $67,700.) The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment.
The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a capital lease by the lessee and as a direct-financing lease by the lessor.

Date

$317,912

10/01/12

$67,700

67,700

67,700

67,700

67,700

60,990

–0–

$317,912

Annual Lease Payment/Receipt	Interest (11%) on Unpaid Liability/Receivable	Reduction of Lease Liability/Receivable	Balance of Lease Liability/Receivable
	10/01/12
$ 67,700	250,212
10/01/13					67,700	$27,523	40,177	210,035
10/01/14	23,104	44,596	165,439
10/01/15	18,198	49,502	115,937
10/01/16	12,753	54,947		60,990
10/01/17	6,710
$406,200	$88,288

(a) Assuming the lessor’s accounting period ends on September 30, answer the following questions with respect to this lease agreement.
(Round answers to 0 decimal places e.g. 58,971.)

(1) What items and amounts will appear on the lessor’s income statement for the year ending September 30, 2013?

$

(2) What items and amounts will appear on the lessor’s balance sheet at September 30, 2013?

$

$

$

$

Balance Sheet (Partial) September 30, 2013
			Current Assets
			Noncurrent Assets

(3) What items and amounts will appear on the lessor’s income statement for the year ending September 30, 2014?

$

(4) What items and amounts will appear on the lessor’s balance sheet at September 30, 2014?

Current Assets

$

$

$

Noncurrent Assets

$

Balance Sheet (Partial) September 30, 2014

(b) Assuming the lessor’s accounting period ends on December 31, answer the following questions with respect to this lease agreement.
(Round answers to 0 decimal places e.g. 58,971.)

(1) What items and amounts will appear on the lessor’s income statement for the year ending December 31, 2012?

$

(2) What items and amounts will appear on the lessor’s balance sheet at December 31, 2012?

Current Assets

$

$

$

Noncurrent Assets

$

Balance Sheet (Partial) December 31, 2012

(3) What items and amounts will appear on the lessor’s income statement for the year ending December 31, 2013?

$

(4) What items and amounts will appear on the lessor’s balance sheet at December 31, 2013?

Current Assets

$

$

$

Noncurrent Assets

$

=

=

Interest revenue

=

=

Balance Sheet (Partial) December 31, 2013
(b) (1)		Interest revenue	($27,523 x 3/12)	$6,881
(3)	[($27,523 – $6,881) + ($23,104 x 3/12) = [$20,642 + $5,776]	$26,418

Interest Receivab

23104

67000

Lease Receivable

165439

6881

781453_0_00676

Interest Revenue
Lease Receivable

10044

Interest Receivab
6881

16925

Lease Receivable

50509

26418

781453_0_00676
Interest Revenue
Lease Receivable

41282

Interest Receivab
26418

67700

Lease Receivable

198886

240001

48194

27523

781453_0_00676
Interest Revenue
Lease Receivable

40177

Interest Receivab
27523
67700
Lease Receivable

210035

23104
781453_0_00676
Interest Revenue
Lease Receivable

44596