San Juan Corp. leased some equipment to Glendale, Inc. on January 1, 2014. The lease required six annual payments, with the first payment due on December 31, 2014. The cost, and also fair value, of the equipment was $140,000, and there was no estimated residual value at the end of the six-year period. The lease was a direct financing lease and does qualify as a capital lease for San Juan . San Juan 's desired rate of return is 11%. Use the following factors for 6 periods: Required:
(For all answers, round to the nearest dollar.) (For all answers, round to the nearest dollar.)
a.Compute the amount of equal annual payments.
b.Prepare San Juan 's 1/1/2014 entry.
c.Prepare all December 31, 2014 entries on San Juan 's books.
d.Assume the same information, except that payments are due on January 1 of each year and the first payment was due on January 1, 2014. Determine the amount of the equal annual payments and determine the amount of interest revenue San Juan should recognize for the year 2014.

Question

San Juan Corp. leased some equipment to Glendale, Inc. on January 1, 2014. The lease required six annual payments, with the first payment due on December 31, 2014. The cost, and also fair value, of the equipment was $140,000, and there was no estimated residual value at the end of the six-year period. The lease was a direct financing lease and does qualify as a capital lease for San Juan . San Juan 's desired rate of return is 11%. Use the following factors for 6 periods:  Required:
(For all answers, round to the nearest dollar.) (For all answers, round to the nearest dollar.)
a.Compute the amount of equal annual payments.
b.Prepare San Juan 's 1/1/2014 entry.
c.Prepare all December 31, 2014 entries on San Juan 's books.
d.Assume the same information, except that payments are due on January 1 of each year and the first payment was due on January 1, 2014. Determine the amount of the equal annual payments and determine the amount of interest revenue San Juan  should recognize for the year 2014.

Quizplus · Accepted Answer

The Answer of San Juan Corp. leased some equipment to Glendale, Inc. on January 1, 2014. The lease required six annual payments, with the first payment due on December 31, 2014. The cost, and also fair value, of the equipment was $140,000, and there was no estimated residual value at the end of the six-year period. The lease was a direct financing lease and does qualify as a capital lease for San Juan . San Juan 's desired rate of return is 11%. Use the following factors for 6 periods:  Required:
(For all answers, round to the nearest dollar.) (For all answers, round to the nearest dollar.)
a.Compute the amount of equal annual payments.
b.Prepare San Juan 's 1/1/2014 entry.
c.Prepare all December 31, 2014 entries on San Juan 's books.
d.Assume the same information, except that payments are due on January 1 of each year and the first payment was due on January 1, 2014. Determine the amount of the equal annual payments and determine the amount of interest revenue San Juan  should recognize for the year 2014.