On January 1, 2025, Sunland Animation sold a truck to Carla Vista Finance for $48,000 and immediately leased it back. The truck was carried on Sunland's books at $44,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Sunland at lease-end. The lease requires five equal rental payments of $11,395 at the end of each year (first payment on January 1, 2026). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Sunland's 2025 journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date 1/1/25 12/31/25 Account Titles and Explanation Cash Debit Credit
On January 1, 2025, Sunland Animation sold a truck to Carla Vista Finance for $48,000 and immediately leased it back. The truck was carried on Sunland's books at $44,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Sunland at lease-end. The lease requires five equal rental payments of $11,395 at the end of each year (first payment on January 1, 2026). The appropriate rate of interest is 6%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Sunland's 2025 journal entries. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date 1/1/25 12/31/25 Account Titles and Explanation Cash Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 12P: Comprehensive Landlord Company and Tenant Company enter into a noncancelable, direct financing lease...
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