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Name:: To Record Purchase of Packaging Machine For Lease

The document provides information to calculate the present value of lease payments for a 6-year lease. It includes a table with the lease amounts, present value factors, and a cell to enter the lease payment amount to make the present value equal $300,000. It also provides journal entries for the first year of the lease and the sale of the machine at the end of the lease.

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Elsa Mendoza
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6 views

Name:: To Record Purchase of Packaging Machine For Lease

The document provides information to calculate the present value of lease payments for a 6-year lease. It includes a table with the lease amounts, present value factors, and a cell to enter the lease payment amount to make the present value equal $300,000. It also provides journal entries for the first year of the lease and the sale of the machine at the end of the lease.

Uploaded by

Elsa Mendoza
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Name: SOLUTION Enter the appropriate present value factors in the shaded cells in column H. Through trial and error, enter an amount of lease payments in cell F9 that makes the present value of lease payments (cell J12) equal $300,000.

1)

Computation of lease related amounts


Amount

PV factor

Initial payment Remaining payments Residual value Present value of lease payments

$ 62,949 62,949 20,000


Amount

1.0000 3.6048 0.5066 x x


# of payments

$ 62,949 226,919 10,132 $ 300,000 $ 377,694 20,000 $ 397,694

Total of lease payments: $ 62,949 Residual value Total amount to be received over six years

Enter the appropriate amounts in the shaded cells in columns H and J. 2) Journal entries, first year Jan. 1 Machine Purchased for Lease Cash To record purchase of packaging machine for lease. Jan. 1 Lease Payments Receivable Unearned Interest Revenue Machine Purchased for Lease To record lease contract. Cash Lease Payments Receivable To record receipt of first lease payment. Dec. 31 Cash 62,949 Unearned Interest Revenue 28,446 Lease Payments Receivable Interest Revenue To record receipt of second lease payment.

300,000 300,000

397,694 97,694 300,000

Jan. 1

62,949 62,949

62,949 28,446

3)

Journal entry to record sale Dec. 31 Cash 29,000 Lease Payments Receivable Gain on Sale of Machine To record sale of machine leased for 6 years.

20,000 9,000

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