90.2K

Verified Solution

Link Copied!

Lisa Leasing Company signs an agreement on January 1,2025 , to lease equipment to Windsor Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1.2025, is $80.000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7.000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $25,562.96 to the lessor, beginning on January 1, 2025. 5. The lessee's incremental borrowing rate is 5%. The lessor's implicit rate is 4% and is unknown to the lessee. 6. Windsor uses the straight-line depreciation method for all equipment. Click here to view factor tables. (For calculotion purposes, use 5 decimal places as displayed in the foctor table provided.) Your answer is correct. Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 2 decimal places, e.s. 5.275.15.) Prepare all of the journal entries for the lessee for 2025 and 2026 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December 31. (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. Round answers to 2 decimal places, es, 5,275,15. Record journal entries in the order presented in the problem.) (To record lease payment) (To record interest expense) (To record amortization of the right-of-use asset) (To record lease payment) (To record interest expense)

Answer & Explanation Solved by verified expert

See Answer