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

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A recent study about online shopping asked respondents to indicate their education level on the following scale "Less than High School, " "High School, " "Some College, " "College+". Which of the following statements is (are) I. Education level is a categorical variable.II. Education level is nominal scaled.III. Education level is ordinal scaled. A. I onlyB. III onlyC. Both I and IIID. Both I and III

Answers

Answer:

C. Both I and III.

Explanation:

The education level is categorical variable and is ordinal scaled.

Ordinal level is a second level statistical measurement technique. It allows ranks to the data for its categorization and degree of variation is not determined between data.  Education level is ordinal scale because it provides orders of quantitative data.

If you earn an annual interest rate of 8.9 percent, how many years will it take to double your money

Answers

Answer:

Every 7.86 years the investment doubles.

Explanation:

Giving the following information:

Interest rate= 8.9% compounded annually

To determine the number of years to double the money, we can use the rule of 70:

The rule of 70 is a means of estimating the number of years it takes for an investment or your money to double.

Number of Years to Double= 70/Annual Rate of Return

Number of Years to Double= 70/8.9

Number of Years to Double= 7.86 years

Every 7.86 years the investment doubles.

Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department: Units: Beginning Inventory: 28,000 units, 100% complete as to materials and 60% complete as to conversion. Units started and completed: 116,000. Units completed and transferred out: 144,000. Ending Inventory: 31,500 units, 100% complete as to materials and 25% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $46,000. Costs in beginning Work in Process - Conversion: $51,850. Costs incurred in February - Direct Materials: $316,730. Costs incurred in February - Conversion: $602,150. Calculate the cost per equivalent unit of conversion.

Answers

Answer:

Cost per equivalent unit = 4.015 per unit

Explanation:

Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.

Cost per equivalent unit = cost / total equivalent units

To determine the conversion cost per equivalent unit, we follow the steps below

Step 1

Determine the total equivalent units

Items                         units                                             Equivalent units

Completed units       144,000      144,000× 100%     144,000

Closing inventory      31,500        31,500 × 60% =     18900

Total equivalent unit                                                   162,900

Step 2

Calculate cost per equivalent unit

Cost per equivalent unit = Total conversion cost/Total equivalent units

                                        = (602,150+ 51,850)/162,900 units

                                         = 4.015 per units

our firm experiences strong seasonal demand, based on financial quarters. You have calculated the following seasonal relatives (or "indices") for each quarter: First Financial Quarter: 0.5 Second Financial Quarter: 1.0 Third Financial Quarter: 1.25 Fourth Financial Quarter: 1.25 The marketing department has just forecasted that 10,000 units will be ordered in the next fiscal year. The operations manager wants you to tell her how many units will be ordered in the fourth quarter of next fiscal year. What is your answer

Answers

Answer: 3,125 UNITS

Explanation:

According to the question above, the seasonal relatives for each quarter for the current year financials has been calculated thus:

1st quarter                      0.5

2nd quarter                    1.0

3rd quarter                     1.25

4th quarter                     1.25

using the above relatives to calculate what the next fiscal year order will be:

Total relatives above = 4.0

for the 4th quarter for the next year order :

= 1.25/4.0 * forecasted qty to be ordered for the next fiscal year

=1.25/4.0 * 10,000

0.3125 * 10,000

=3,125 units will be ordered in the forth quarter of the next fiscal year.

The number of units that would be ordered in the next fiscal year would be 3125

The financial report

The first quarter = 0.5

The second quarter = 1.0

The third quarter = 1.25

The fourth quarter = 1.25

0.5+1+1.25+1.25 = 4

The relatives are 4

The solution for the 4th quarter

(4thQuarter)/(TotalRelatives) \n\n= (1.25)/(4)

= 0.3125

The number of the units in the fiscal year would be 0.3125*10000

= 3,125 units

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Answers

Answer: i’m pretty sure it’s true.

Explanation:

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Final answer:

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Explanation:

The statement "it's always immediately obvious when boundaries are crossed in a relationship" is false.

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