BUSINESS COLLEGE

Macinski Leasing Company Leases a new machine to Sharrer Corporation. The machine has a cost of $70,000 and fair value of $95,000. Under the 3 year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3 year useful life and no residual value. The lease was signed on January 1, 2017. Macinski expects to earn an 8% return on its investment, and this implicit rate is known by Sharrer. The annual rentals are payable on each December 31, beginning December 31, 2017.a) Discuss the nature of the lease agreement and the accounting method that each party to the lease should applyb) Prepare amortization schedule suitable for both the lessor and lesseec) Prepare the journal entry at commencement of the lease for Macinskid) Prepare the journal entry at commencement of the lease for Sharrere) Prepare the journal entry at commencement of the lease for Sharrer, assuming (1) Sharrer does not know Macinski's implicit rate (Sharrer's incremental borrowing rate is 9%), and (2) Sharrer incurs initial direct costs of $10,000.

Answers

Answer 1
Answer:

Answer:

Explanation:

amortization schedule:

Date      Lease PMT    Interest    Principal                   Lease Balance

01.01.17                                                                                    95,000

12.31.17  37,534.57     8550         28,984.57                         66,015.43

12.31.18  37,534.57     5,941.39    31,593.18                           34,422.25

12.31.19  37,534.57     3,112.33     34,422.25                                 0

Present value interest factor of annuity for 9% and 3 years = 2.531

Annual payment will be = 95,000/2.531 = $37,534.57

Interest for the 1st year will be = 95,000*0.09 = $8550

Dr Fixed Asset 95,000

Cr Lease Paybale 95,000

31/12/17

Dr Lease Payable  28,984.57                        

Dr Interest 8550

Cr Cash 37,534.57

31/12/18

Dr Lease Payable  31,593.18                          

Dr Interest 5,941.39    

Cr Cash 37,534.57

31/12/19

Dr Lease Payable  34,422.25                                

Dr Interest 3,112.33    

Cr Cash 37,534.57
Answer 2
Answer:

Final answer:

The journal entry at commencement of the lease for Macinski includes debit: Lease Receivable $234,618.36, debit: Machine Cost $70,000.00, and credit: Lease Revenue $304,618.36. The journal entry at commencement of the lease for Sharrer includes debit: Machine $304,618.36, credit: Lease Payable $234,618.36, and credit: Cash $70,000.00.

Explanation:

a) The lease agreement between Macinski Leasing Company and Sharrer Corporation is a finance lease because it transfers ownership of the machine to Sharrer at the end of the lease term. Both parties should apply the accounting method for finance leases.

b) To prepare the amortization schedule, we need to calculate the annual lease payment, which is the present value of the future lease payments. We can use the formula PV = PMT x [(1 - (1 + r)^-n) / r], where PV is the present value, PMT is the annual payment, r is the interest rate, and n is the number of periods. Using the given information, we can calculate the annual payment and then prepare the amortization schedule.

c) The journal entry at commencement of the lease for Macinski is:

  • Debit: Lease Receivable $234,618.36
  • Debit: Machine Cost $70,000.00
  • Credit: Lease Revenue $304,618.36

d) The journal entry at commencement of the lease for Sharrer is:

  • Debit: Machine $304,618.36
  • Credit: Lease Payable $234,618.36
  • Credit: Cash $70,000.00

e) The journal entry at commencement of the lease for Sharrer, assuming (1) Sharrer does not know Macinski's implicit rate and (2) Sharrer incurs initial direct costs of $10,000, is:

  • Debit: Machine $304,618.36
  • Debit: Lease Liability (including initial direct costs) $244,618.36
  • Debit: Lease Liability (excluding initial direct costs) $234,618.36
  • Credit: Cash $70,000.00

Learn more about Lease Accounting here:

brainly.com/question/32631785

#SPJ11

Related Questions

A registered representative wishes to give a speech to a group of 35 potential retail clients at a restaurant. The speech is scripted and is a general discussion about investing in securities. Which statement is TRUE?
Most states restrict the number of hospitals in a given geographic area under "Certificate of Need" (CON) laws. These laws require any new hospital facility to provide evidence that there is a demand for its facility that is not currently being met by the existing healthcare facilities in that geographic market. Identify the market inefficiency that these CON laws are trying to fix. How does restricting the number of hospitals correct this inefficiency? Explain briefly.
In a press conference, the president of a small country displays a chart showing that GDP has risen by 10 percent every year for five years. He argues that this growth shows the brilliance of his economic policy. However, his chart uses nominal GDP numbers. This chart might be wrong because it: is rare for GDP to increase by the same amount for five years. only uses five years of information. relies on nominal GDP which might have increased because of price increases and not output increases. relies on nominal GDP which might have increased because of output increases and not price increases. If you were a reporter at the press conference, to get a more accurate picture of the country’s economic growth you should ask for the: unemployment rate which reflects changes in international flows. growth rate of real GDP which excludes price changes. growth rate of real GDP which includes price changes. inflation rate which includes price change.
Suppose that Xtel currently is selling at $50 per share. You buy 500 shares using $17,500 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 8%. a. What is the percentage increase in the net worth of your brokerage account if the price of Xtel immediately changes to (i) $56; (ii) $50; (iii) $44? b. If the maintenance margin is 30%, how low can Xtel's price fall before you get a margin call? c. How would your answer to (b) would change if you had financed the initial purchase with only $12,500 of your own money? d. What is the rate of return on your margined position (assuming again that you invest $17,500 of your own money) if Xtel is selling after one year at (i) $56; (ii) $50; (iii) $44? e. Continue to assume that a year has passed. How low can Xtel's price fall before you get a margin call?
Which of the following is an example of the free-rider problem? a. Both Zoe and Zach receive low-cost dental care at the local dental school, so neither of them pays the full cost of the care. b. Alfred receives a free lunch from the local "Meals on Wheels" program because of his low monthly income. Yet his next door neighbor, Alice, is not eligible for the free lunch. c. Bruce owns Buster, a large dog who barks whenever anyone walks near his house. Betty lives next to Bruce, and Buster's barking can be heard whenever anyone walks near her house, too. Thus, Betty receives free protection from burglars because of Buster's barking. d. Sam purchases a burger at a fast food restaurant and gets a second burger free because the restaurant is having a buy one, get one free sale.

A company plans to enclose three parallel rectangular areas for sorting returned goods. The three areas are within one large rectangular area and yd of fencing is available. What is the largest total area that can be​ enclosed

Answers

Answer:

A lot of information is missing, so I looked for similar questions:

  • 1,064 yd of fencing is available

since 1,064 is the perimeter and we have a rectangle, we can write the perimeter equation as: 2L + 2W = 1,064

area = L · W

2W = 1,064 - 2L

W = 532 - L

now we replace in the area equation:

area = (532 - L) · L = -W² + 532W (quadratic equation format)

the value of L as our X coordinate:

L = 532 / 2 = 266

W = 532 - 266 = 266

area = -(266)² + (532 x 266) = -70,756 + 141,512 = 70,756 sq yards

or

area = 266 · 266 = 70,756 sq yards

When you have a rectangle, the largest possible area is a square, where both sides have the same length.

Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower its risks. It is examining three companies—a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Company Correlation with Treynor Pie Company Sales ($ millions) Expected Earnings ($ millions) Standard Deviation in Earnings ($ millions) Treynor PieCompany + 1.0 $ 170 $ 8 $ 2.0 Gourmet restaurant + .4 64 8 1.3 Baby food company + .4 53 5 1.8 Nutritionalproducts company − .7 71 6 3.6 a-1. Compute the coefficient of variation for each of the four companies

Answers

Answer:

The coefficient of variation for each of the four companies is:

- Treynor Pie Company = 0.25  (2/8)

- Gourmet restaurant = 0.16  (1.3/8)

- Baby food Company = 0.36  (1.8/5)

- Nutritional products Company = 0.16 (1/6)

Explanation:

In finance, the coefficient of variation is a statistical measure that represents the ratio of the standard deviation and the mean of a data series related to the return on investment. It allows investors to determine how much volatility, or risk, is assumed in comparison to the amount of return expected from investments. The lower the ratio of the standard deviation to mean return, the better risk-return trade-off.

Formula:  CV=σ/μ

Where:  

σ = standard deviation

μ = mean

Which of the following statements is true concerning hedge accounting?Hedges of foreign currency firm commitments are used for current sales or purchases.
Hedges of foreign currency firm commitments are speculative in nature.
Hedges of foreign currency firm commitments are used for future sales or purchases.
Hedges of foreign currency firm commitments are used for future purchases only.
Hedges of foreign currency firm commitments are used for future sales only.

Answers

Hedges of foreign currency firm commitments are used for future sales or purchases.

hedge accounting

Hedge accounting is a form of accounting in which inputs to change a security's fair value and its opposing hedge are regarded as one. Hedge accounting seeks to mitigate the volatility caused by the frequent adjustment to the value of a financial instrument, also known as fair value accounting or mark-to-market. This volatility is decreased by merging the instrument and the hedge into a single entry, which offsets the movements of the opposite. Hedge accounting adjusts the fair value of a securities and its opposing hedge with a single entry.

To know more about hedge accounting visit the link

brainly.com/question/17286144

#SPJ4

Why is zero unemployment and zero inflation not ideal for the economy?

Answers

Zero unemployment and zero inflation is not good fpr the economy because inflation is important to keep the economy running.economis t call this sustainable inflation. when there is an inflation , you know that the price will rise in the future. your money is more valuable now since the price is lower then the future thus you sped noe instead of saving. this keeps the economy running.
If unmeployment were zero that would mean no new business could start, no existing business could expand and no one is entering the labor force. shortage of labor like this would increase the wage as the existing business  have to compete for the labors and if wage sgoes up then prices goes up as well: inflation.

15–1. Undue Influence. Juan is an elderly man who lives with his nephew, Samuel. Juan is totally dependent on Samuel’s support. Samuel tells Juan that unless he transfers a tract of land he owns to Samuel for a price 35 percent below its market value, Samuel will no longer support and take care of him. Juan enters into the contract. Discuss fully whether Juan can set aside this contract.

Answers

Answer: It is Voidable

Explanation:

Samuel took advantage of his fiduciary responsibility is taking care of Juan to unfairly influence him to sell him a piece of land at a price 35% below market price. Juan as an old man who is TOTALLY dependant on Samuel, felt he had no choice but to agree as failure to do so will lead to Samuel no longer taking care of him and this could be quite disadvantageous to him.

There was UNDUE INFLUENCE and Coercion in this scenario which means Voluntary consent was lacking.

For this reason, the contract can be voided.

The Bureau of Labor Statistics announced that in January 2013, of all adult Americans, 143,322,000 were employed, 12,332,000 were unemployed, and 89,008,000 were not in the labor force. Use this information to calculate: a. the adult population b. the labor force c. the labor-force participation rate d. the unemployment rate

Answers

Answer:

a. 244,662,000

b. 155,654,000

c. 63.62%

d. 7.92%

Explanation:

a. the adult population

Adult population = Number of employed + Number of unemployed + Number of people not included in labor force

= 143,322,000 + 12,332,000 + 89,008,000

= 244,662,000

b. the labor force

Labor force = Number of employed + Number of unemployed

= 143,322,000 + 12,332,000

= 155,654,000

c. the labor-force participation rate

Labor-force participation rate = Labor force ÷ Adult population × 100

= 155,654,000 ÷ 244,662,000 × 100

= 63.62%

d. the unemployment rate

Unemployment rate = Number of unemployed ÷ Labor force × 100

= 12,332,000 ÷ 155,654,000 × 100

= 7.92%

The Bureau of Labour Statistics announced is:

  • A. The adult population is 244,662,000
  • B. the labour force is155,654,000
  • C. the labor-force participation rate is 63.62%
  • D. the unemployment rate is 7.92%

A. The adult population = Employed + Unemployed + Not in the labour force

The adult population = 143,322,000 + 12,332,000 + 89,008,000

The adult population = 244,662,000

B. The labour force = Employed + Unemployed

The labour force = 143,322,000 + 12,332,000

The labour force = 155,654,000

C. The labor-force participation rate = (Labour force / Adult population) × 100

The labor-force participation rate = 155,654,000 ÷ 244,662,000 × 100

The labor-force participation rate = 63.62%

D. The unemployment rate = Number of unemployed ÷ Labour force × 100

The unemployment rate = 12,332,000 ÷ 155,654,000 × 100

The unemployment rate = 7.92%

Therefore, a. 244,662,000, b. 155,654,000, c. 63.62%, d. 7.92%

Learn more about on unemployment rate, here:

brainly.com/question/29854835

#SPJ6
Other Questions
Maddy purchases 2 pounds of beans and 3 pounds of rice per month when the price of beans is S2 per pound. She purchases 1 pounds of beans and 4 pounds of rice per month when the price of beans is $3 per pound. Maddy's cross- price elasticity of demand for beans and rice is A. -0.71, and they are complements B. 0.71, and they are substitutes. C. 1.4, and they are substitutes D. -1.4, and they are complements
Tyrone and Akira, who are married, incurred and paid the following amounts of interest during 2019: Home acquisition debt interest $ 15,000 Credit card interest 5,000 Home equity loan interest (used for home improvement) 6,500 Investment interest expense 10,000 Required: With 2019 net investment income of $2,000, calculate the amount of their allowable deduction for investment interest expense and their total deduction for allowable interest. Home acquisition principal, and the home equity loan principal combined are less than $750,000.
The workers at State Hospital, a public sector employer, and Acme Inc, a private employer, are subject to speech censorship and arbitrary job termination. Constitutional issues are present only for the State Hospital workers.TrueFalse
1. Fidelity Corporation offers to hire Ron to replace Mon-ica, who has given Fidelity a month's notice of intentto quit. Fidelity gives Ron a week to decide whether toaccept. Two days later, Monica signs an employmentcontract with Fidelity for another year. The next day,Monica tells Ron of the new contract. Ron immediatelysends a formal letter of acceptance to Fidelity. Do Fidel-ity and Ron have a contract? Why or why not? (See Ter-mination of the Offer.)