Refer to Rocket Corporation.
Required:
1. Determine the pre-tax amounts that Denver Leasing would record on its balance sheet and income statement as of December 31 of the current year.
2. Make the appropriate journal entries to record the lease and the related transactions from the inception of the lease through December 31 on Denver’s books.
3. Determine the pre-tax amounts that Denver Leasing would record on its balance sheet and income statement as of December 31 of the next year.
What will be an ideal response?
Answer:
1.
Current Assets:
Lease Receivable 288,557
Long-Term Assets
Lease Receivable $1,141,653
2.
July 1
Lease Receivable
1,800,000
Equipment
1,800,000
Cash
239,514
Lease Receivable
239,514
December 31
Cash
239,514
Interest Revenue
109,234
Lease Receivable
130,280
3.
Current Assets:
Lease Receivable $288,558
Long-Term Assets
Lease Receivable $1,141,649