Concord Leasing Company signs a lease agreement on January 1,
2017, to lease electronic equipment to Marigold Company. The term
of the noncancelable lease is 2 years, and payments are required at
the end of each year. The following information relates to this
Marigold Company has the option to purchase the equipment for
$16,000 upon termination of the lease.
The equipment has a cost and fair value of $157,000 to Concord
Leasing Company. The useful economic life is 2 years, with a
salvage value of $16,000.
Marigold Company is required to pay $5,100 each year to the
lessor for executory costs.
Concord Leasing Company desires to earn a return of 9% on its
Collectibility of the payments is reasonably predictable, and
there are no important uncertainties surrounding the costs yet to
be incurred by the lessor.
(a) Prepare the journal entries on the books of Concord
Leasing to reflect the payments received under the lease and to
recognize income for the years 2017 and 2018.
(b) Assuming that Marigold Company exercises its option
to purchase the equipment on December 31, 2018, prepare the journal
entry to reflect the sale on Concords books.
Date Account Titles and Explanation Debit Credit 1/1/17 Lease Receivable 157,000 Equipment 157,000 12/31/17Cash Executory Costs Payable 5100 Lease Receivable Interest Receivable 16000 12/31/18 Cash Executory Costs Payable 5100 Lease Receivable Interest Revenue
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more