Pharoah Corporation enters into a 7-year lease of equipment on December 31, 2024, which requires 7 annual payments of $39,300 each, beginning December 31, 2024. In addition, Pharoah guarantees the lessor a residual value of $19,200 at the end of the lease. However, Pharoah believes it is probable that the expected residual value at the end of the lease term will be $9,600. The equipment has a useful life of 7 years. Prepare Pharoahs' December 31, 2024, journal entries, assuming the implicit rate of the lease is 9% and this is known to Pharoah. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Click here to view factor tables. Date Account Titles and Explanation December 31, 2024 Right-of-Use Asset December Lease Liability (To record the lease liability) Lease Liability 31, 2024 Cash Debit 39300 Credit 39300
Pharoah Corporation enters into a 7-year lease of equipment on December 31, 2024, which requires 7 annual payments of $39,300 each, beginning December 31, 2024. In addition, Pharoah guarantees the lessor a residual value of $19,200 at the end of the lease. However, Pharoah believes it is probable that the expected residual value at the end of the lease term will be $9,600. The equipment has a useful life of 7 years. Prepare Pharoahs' December 31, 2024, journal entries, assuming the implicit rate of the lease is 9% and this is known to Pharoah. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places e.g. 5,275.) Click here to view factor tables. Date Account Titles and Explanation December 31, 2024 Right-of-Use Asset December Lease Liability (To record the lease liability) Lease Liability 31, 2024 Cash Debit 39300 Credit 39300
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10GI: Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6...
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