On July 1, 2017, Shroff Company leased a warehouse building under a 15-year leas

Question

On July 1, 2017, Shroff Company leased a warehouse building under a 15-year lease agreement. The lease requires quarterly lease payments of $5,000. The first lease payment is due on September 30, 2017. The lease was reported as a capital lease using a 6% annual interest rate.?

QUESTION 1 Not complete Marked out of 1.00 Flag question Accounting for Leases on uly 1 2017, s ro company eased a warehouse building under a 1 5-year lease agree was reported as a capital lease using a 6% annual interest rate ent. The ease requires quarter lease payments of S5,000. The rst asep ment S ue n ember 3·20 ·The ease Required a. Prepare a financial statement effects template to show the effects of recording the initial signing of the lase on July 1, 2017 and the necessary entries on September 30 and December 31, 2017. Income Statement Balance Sheet Transaction Cash Asset + Noncash Assets -Contra-Assets = Liabilities + Contrib. Capital + Earned Capital RevenueExpensesNet Income 7/1/17 Signed a capital lease 9V3017 Depreciation on leased asset 9/30/17 Made quarterly lease payment 12/31/17 Depreciation on leased asset 12/31/17 Made quarterly lease payment Check Save Answers Next page

Explanation / Answer

BALANCE SHEET INCOME STATEMENT Transaction Cash Assets+ Non-cash Assets- Contra-assets = Liabilities+ Contributed Capital+ Earned Capital Revenue- Expenses= Net Income July,1, 2017- Signed A capital Lease 0 $196,900 0 $196,900 Sep,30,2017- Depn. On Leased asset ($196900/15*3/12) 0 0 ($3,282) 0 ($3,282) 0 $3,282 ($3,282) Sep,30,2017- Qrtrly. Leased Payment ($5,000) ($2,046.50) ($2,953.50) 0 $2,953.50 -2953.5 Dec 31,2017- Depn. On Leased asset ($3,282) ($3,282) 0 $3,282 ($3,282) Dec 31,2017- Qrtrly. Leased Payment -$5,000.00 -$2,077.20 -$2,922.80 $0.00 $2,922.80 -$2,922.80 Total -$10,000.00 $196,900.00 -$6,564.00 $192,776.30 $0.00 -$12,440.30 $0.00 $12,440.30 -$12,440.30 ASSET/LIABILITY Total $180,336.00 $180,336.00 Working Note:- Finding the PV of the lease with 5000 as PMt. At 6%/4=1.5% interest for 15*4=60 periods 5000X Cumm PVAF @1.5%for( 1-60 )= (39.380X5000)=196900

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