Only need answers for requirement 2! Newton Labs leased chronometers from Brookl
ID: 2400635 • Letter: O
Question
Only need answers for requirement 2!
Newton Labs leased chronometers from Brookline Instruments on January 1,2018. Brookline Instruments manufactured the chronometers at a cost of $200,000. The chronometers have a fair value of $260,000. Appropriate adjusting entries are made quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) Related Infornat i on: Lease tern Quarterly lease payments Economic life of asset Est inated resi dual value of chrononet ers at end of lease tern Interest rate charged by the lessor 5 years (20 cuarterly periods) $14,547 at Jan. 1. 2018, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter 6 years $11.228 8x Required 1. Prepare appropriate entries for Newton Labs to record the arrangement at its commencement, January 1, 2018, and on March 31 2018 2. Prepare appropriate entries for Brookline Instruments to record the arrangement at its commencement, January 1, 2018, and on March 31, 2018Explanation / Answer
**carrying value after first payment = 260000-14547=245453
Interest in second installment = 245453* 2% = 4909 [8% /4 = 2% per quarter]
Date Account Debit credit Jan 1 2018 Lease receivable 260000 cost of goods sold 200000 sales revenue 260000 Equipment 200000 1 jan 2018 cash 14547 lease receivable 14547 march 31 2018 cash 14547 lease receivable 9638 Interest revenue 4909Related Questions
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