We assume that the lease is appropriately recorded as an operating lease by Harter, Harter...
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Accounting
We assume that the lease is appropriately recorded as an operating lease by Harter,
Harter Company leased machinery to Stine Company on Jan 1, 2018, for a ten-year period expiring Jan 1, 2028. Equal annual payments under the lease are $250,000 and are due on Jan 1 of each year. The first payment was made on Jan 1, 2018. The rate of interest used by Harter and Stine is 9%. The lease receivable before the first payment is $1,750,000 and the cost of the machinery on Harter's accounting records was $1,550,000.
On 1/1/2018, the entry to record the operating lease is
options:
Lease receivable 1,750,000
Leased asset 1,750,000
Cost of goods sold 1,550,000
Lease receivable 1,550,000
Cash 250,000
Unearned revenue 250,000
b and c
On 12/31/2018, the entry to record the operating lease is
options:
Lease receivable 1,750,000
Leased asset 1,750,000
Cost of goods sold 1,550,000
Lease receivable 1,550,000
Unearned revenue 250,000
Lease revenue 250,000
b and c
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