Exercise 20-19 On September 15, 2017, Blossom Camping Limited, the lessee, enter
ID: 2546954 • Letter: E
Question
Exercise 20-19
On September 15, 2017, Blossom Camping Limited, the lessee, entered into a 20-year lease with Sullivan Corp. to rent a parcel of land at a rate of $31,320 per year. Both Blossom and Sullivan use ASPE. The annual rental is due in advance each September 15, beginning in 2017. The land has a current fair value of $206,000. The land reverts to Sullivan at the end of the lease. Blossom Camping’s incremental borrowing rate and Sullivan’s implicit interest rate are both 12%.
Date
Account Titles and Explanation
Debit
Credit
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Date
Account Titles and Explanation
Debit
Credit
SHOW LIST OF ACCOUNTS
LINK TO TEXT
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Exercise 20-19
On September 15, 2017, Blossom Camping Limited, the lessee, entered into a 20-year lease with Sullivan Corp. to rent a parcel of land at a rate of $31,320 per year. Both Blossom and Sullivan use ASPE. The annual rental is due in advance each September 15, beginning in 2017. The land has a current fair value of $206,000. The land reverts to Sullivan at the end of the lease. Blossom Camping’s incremental borrowing rate and Sullivan’s implicit interest rate are both 12%.
Prepare Blossom Camping's required journal entries on September 15, 2017 and at December 31, 2017, its year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)Date
Account Titles and Explanation
Debit
Credit
September 15, 2017December 31, 2017
September 15, 2017December 31, 2017
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Prepare the entries required on Sullivan’s books at September 15, 2017 and at December 31, 2017, its year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)Date
Account Titles and Explanation
Debit
Credit
September 15, 2017December 31, 2017
September 15, 2017December 31, 2017
SHOW LIST OF ACCOUNTS
LINK TO TEXT
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Explanation / Answer
In books of Blossom Camping's
In books of Sullivan’s books
Date Account Debit credit 15 september 2017 Prepaid lease 31320 cash 31320 [being lease rental paid] 31 dec 2017 Lease expense 9135 Prepaid lease 9135 [Being lease rent expired for 3.5 months (15 sep-31dec) 31320 *3.5/12]Related Questions
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