1. Dede entered into a 10-year lease of equipment for $5,000 a year, payable at
ID: 2415618 • Letter: 1
Question
1. Dede entered into a 10-year lease of equipment for $5,000 a year, payable at the beginning of each year. At the end of the
lease, the equipment will probably be worthless. If Dede’s incremental borrowing rate is 10 percent and the lessor’s implicit
interest rate, which Dede is aware of, is 8 percent, Dede should record an
expense of $5,000
asset of $5,000
asset of $33,795
None of the above
2. The journal entry in the buyer’s books to record the honoring by the seller of an account deemed uncollectible in a factoring
agreement with recourse would include a
debit to Bad Debt Expense
debit to Allowance for Uncollectible Accounts
debit to Cash
debit to Loss on Factoring Agreement
3. Bubba Co.’s beginning inventory at January 1 was understated by $100,000, and its ending inventory was overstated by
$120,000. Bubba’s cost of sales for the year would be
understated by $100,000
overstated by $100,000
understated by $220,000
overstated by $220,000
expense of $5,000
asset of $5,000
asset of $33,795
None of the above
2. The journal entry in the buyer’s books to record the honoring by the seller of an account deemed uncollectible in a factoring
agreement with recourse would include a
debit to Bad Debt Expense
debit to Allowance for Uncollectible Accounts
debit to Cash
debit to Loss on Factoring Agreement
3. Bubba Co.’s beginning inventory at January 1 was understated by $100,000, and its ending inventory was overstated by
$120,000. Bubba’s cost of sales for the year would be
understated by $100,000
overstated by $100,000
understated by $220,000
overstated by $220,000
Explanation / Answer
As per Chegg guidelines we answer one question per post Since Lease covers major part of the life of asset lease would be classified as Capital lease or Finance Lease. Thus Lessee should consider it as an asset Lesse should recognise asset at =5000 * 6.759 = 33,795 Time PVF - 1.0000 1.00 0.9091 2.00 0.8264 3.00 0.7513 4.00 0.6830 5.00 0.6209 6.00 0.5645 7.00 0.5132 8.00 0.4665 9.00 0.4241 Total PVF for 10 Years 6.7590
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.