On January 1, 2017, Blossom Corporation signed a 5-year noncancelable lease for a machine. The
terms of the lease called for Blossom to make annual payments of $8,560 at the beginning of each
year, starting January 1, 2017. The machine has an estimated useful life of 6 years and a
$4,800 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease
term. Blossom uses the straight-line method of depreciation for all of its plant assets. Blossom’s
incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown.
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Don’t show me this message again for the assignment Compute the present value of the minimum lease payments. (Round present value factor
calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places
e.g. 58,971.)
$
The present value of the minimum lease payments Prepare all necessary journal entries for Blossom for this lease through January 1, 2018. (Credit
account titles are automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the account titles and enter 0 for
the amounts. Round answers to 0 decimal places e.g. 58,971.)
Date Account Titles and
Explanation (To record the lease.) (To record first payment.) (To record depreciation.) Debit Credit (To record interest.)
1/1/18 (To record second payament.)
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