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Chapter 15 Hwk for Lease Accounting

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Submitted By danisha528
Words 675
Pages 3
ACCT 495
Group 4
July 14th 2014

Chapter 15 Homework

Exercise 7- American Food Services, Inc made a lease agreement $4 million (FV & PV) 4 equal payments at end of each year. Useful life is 4 years no residual value. Interest rate implicated is 10%. 1. Prepare journal entry for American Food Services at Jan 1 2011.
Lease Equipment (packaging machine) 4,000,000 Lease Payable(packaging machine) 4,000,000 2. Prepare amortization schedule for the four-year term. Date | Payment | Interest | Principle | Balance | 1/1/11 | - | - | - | 4,000,000 | 12/31/11 | 1,261,881 | 400,000 | 861,881 | 3,138,119 | 12/31/12 | 1,261,881 | 313,812 | 948,069 | 2,190,050 | 12/31/13 | 1,261,881 | 219,005 | 1,042,876 | 1,147,174 | 13/31/14 | 1,261,881 | 114,707 | 1,145,174 | - | 3. Prepare journal Entry for the first lease payment 12/31/2011.
Interest Expense 400,000
Lease Payable 861,881 Cash 1,261,881 4. Prepare journal entry for third lease payment 12/31/13
Interest Expense 219,005
Lease Payable 1,042,876 Cash 1,261,881

Exercise 8-Gerogia-Atlantic, Inc., leased warehouse facility from IC Leasing Corporation. 3 year agreement semiannual payments $562,907 first payments June 30, 2011. Borrowing rat is 10%. Fare market value is 3 MILLION. 1. Preset value of lease payment at June 30, 2011.
The present value of the lease payment is $562,907*(n-6. I-10%)=3 million 2. What pretax amounts related to lease on balance sheet dec 31 2011.

Georgia-Atlantic Inc
Partial Balance Sheet
As of 12/31/2011 Asset
Equipement 3,000,000
Acc Dep (1,000,000)500,000
BV 2,000,000 2500000 Liability Lease Payable 2,117,895 1996041

3. What pretax amount related to lease on income statement dec 31 2011.
Georgia-Atlantic Inc
Partial Income Statement
For the period end 12/31/11
Interest

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