Lansing East leased high-tech electronic equipment from Davis Computing on January 1, 2021. Davis Computing manufactured the equipment at a cost of $42,500. (FV of $1, PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate 2 years (8 quarterly periods) $7,500 at the beginning of each period 2 years $56,040 8% Required: 1. Show how Davis Computing determined the $7,500 quarterly rental payments. 2. Prepare appropriate journal entries for Davis Computing to record the lease at its beginning, January 1, 2021, and the second lease payment on April 1, 2021.

Lansing East leased high-tech electronic equipment from Davis Computing on January 1, 2021. Davis Computing manufactured the equipment at a cost of $42,500. (FV of $1, PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate 2 years (8 quarterly periods) $7,500 at the beginning of each period 2 years $56,040 8% Required: 1. Show how Davis Computing determined the $7,500 quarterly rental payments. 2. Prepare appropriate journal entries for Davis Computing to record the lease at its beginning, January 1, 2021, and the second lease payment on April 1, 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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