Home / Questions / Castle Leasing Company signs a lease agreement on January 1 2019 to lease electronic equip...
Castle Leasing Company signs a lease agreement on January 1, 2019, to lease electronic equipment to Jan Way Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement.
1. Jan Way has the option to purchase the equipment for $16,000 upon termination of the lease. It is not reasonably certain that Jan Way will exercise this option.
2. The equipment has a cost of $120,000 and fair value of $160,000 to Castle Leasing. The useful economic life is 2 years, with a residual value of $16,000.
3. Castle Leasing desires to earn a return of 5% on its investment.
4. Collectibility of the payments by Castle Leasing is probable.
Instructions
a. Prepare the journal entries on the books of Castle Leasing to reflect the payments received under the lease and to recognize income for the years 2019 and 2020.
b. Assuming that Jan Way exercises its option to purchase the equipment on December 31, 2020, prepare the journal entry to record the sale on Castle Leasing’s books.
May 09 2020 View more View Less
At a signalized intersection, one lane is observed to discharge 40 through vehicles in the same time as the left lane discharges 10 through vehicles and 20 left-turning v...
Apr 27 2020Which of the following involves overseeing the transformation process that converts resources such as labor and raw materials into finished goods and services? [A]Simulat...
Mar 12 2018How can shareholders benefit from a leveraged recap when it reduces the total value of equity?
Jun 09 2021World Class in the Deep South “Aloof.” “Serious,” “Not youthful.” “Definitely, not fun.” These were the unfortunate epithets applied to Mercedes-Bent by a market research...
Jul 04 2020True / False Questions1.The term ethics refers to accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions o...
Jan 11 2020Compound Interest The formula for the amount A in a savings account compounded n times per year for t years at an interest rate r and an initial deposit of P is given by ...
Jul 31 2021Management by Objectives (MBO) is a management process that is popular in many organizations. It is the joint setting of goals and objectives by superiors and subordinate...
Dec 05 2017If the MPC was 0.90, (a) how much did consumer spending decline initially in response to the 2013 expiration of the payroll tax cut (essentially, a tax hike to consumer...
May 11 2020One-year Treasury bills currently earn 3.00 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 3.50 percent and that two years from n...
May 27 2021Calculate the rms speed of an oxygen gas molecule, , at
Aug 19 2021