AC 302 Chapter 21 Question 6

AC 302 Chapter 21 Question 6
Name				Date		
Instructor				Course		
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
E21-6 (Lessor Entries, Sales-Type Lease) Wadkins Company, a machinery dealer, leased a 						
machine to Romero Corporation on January 1, 2012. The lease is for an					8 	-year period 
and requires equal annual payments of			$38,514 	at the beginning of each year. The first 		
payment is received on January 1, 2012. Wadkins had purchased the machine during 2011 for						
$170,000 	Collectibility of lease payments is reasonably predictable, and no important 					
uncertainties surround the amount of costs yet to be incurred by Wadkins. Wadkins set the annual 						
rental to ensure an		11%	rate of return. The machine has an economic life of			
10 	years with no residual value and reverts to Wadkins at the termination of the lease.					
						
Instructions:						
(a) Compute the amount of the lease receivable. (Use the Excel Present Value formula "=PV(" to solve.)						
						
	Use this area to enter the Present Value formula					
						
(b) Prepare all necessary journal entries for Wadkins for 2012.						
						
Jan 1, 12	Account Title				Amount	
	Account Title				Amount	
	Account Title					Amount
	Account Title					Amount
						
Jan 1, 12	Account Title				Amount	
	Account Title					Amount
						
Dec 31, 12	Account Title				Amount	
	Account Title					Amount