Prepare kingdom amortization schedule

Assignment Help Accounting Basics

Reference no: EM13136828

Kingdom Leasing Inc. agrees to lease jousting equipment to Knight Inc. on Jan 1, 2012. They agree on the following terms:

1) The normal selling price of the jousting equipment is $325000 and the cost of the asset to Kingdom Leasing Inc. was $250000.
2) Knight will pay all maintenance, insurance and taxes costs directly and annual payments of $60000 on Jan 1 each year.
3) The lease begins on Jan 1, 2012 and payments will be in equal annual installments.
4) The lease is noncancelable with no renewal option. The lease term is 10 years (the same as the estimated economic life).
5) At the end of the lease, the jousting ring will revert to Kingdom Leasing Inc. and have an unguaranteed residual value of $30000. Their implicit interest rate is 10%.
6) Kingdom Leasing, Inc. Incurred costs of $6500 in negotiating and closing the lease. There are no uncertainties regarding additional costs yet to be incurred and the collectability of the lease payments is reasonably predictable.

Required:
a) Determine what type of lease this would be for the lessor and calculate the following: (show all work)
Lease Receivable
Sales Price
Cost of Sales
b) Prepare Kingdom's amortization schedule for the lease terms.
c) Prepare all the journal entries for Kingdom for 2012. Assume a calendar year fiscal year.

Reference no: EM13136828

Questions Cloud

Prepare entries to record these transactions : During the current month, a company that uses a job order cost accounting system incurred a monthly factory payroll of $120,000 paid in cash. Of this amount, $30,000 is classified as indirect labor and the remainder as direct. Prepare entries to r..

A customer service levels differ internationally : Why should a customer service levels differ internationally? Is it, for example, ethical to offer a lower customer service level in developing countries than industrialized countries?

How many brackets should jasper produce : Finished goods inventory at the end of last December was 200 units. Ending finished goods inventory is equal to 25 percent of the next month's sales. Jasper Company expects to sell the brackets for $45 each. How many brackets should Jasper produce..

How many liters of acetylene gas are produced : During the late 1800's, hard rock miners replaced candles with carbide lamps for work in mine shafts. The lamps worked by dripping water onto calcium carbide that generated acetylene gas (H2C2) that was burned.

Prepare kingdom amortization schedule : The normal selling price of the jousting equipment is $325000 and the cost of the asset to Kingdom Leasing Inc. was $250000.

What do think nora watson meant in her summary : what do think Nora Watson meant in her summary when she said "I think most of us are looking for a calling not a job. Most of us...have jobs that are too small for our spirit. Jobs are not big enough for people"

What are james and pete realized gains on this exchange : Each party assumed the mortgage on the building received. What are James’s and Pete’s realized gains on this exchange, respectively?

Stakeholders critical to program evaluations : What are the three major categories of stakeholders you deem as being critical to the success of your evaluation? Why were these people instrumental to your success?

How should katie treat receipt of the partnership interest : On July 1 of the current year, the unrestricted partnership interest (fair market value of $25,000) was transferred to Katie. How should Katie treat the receipt of the partnership interest in the current year?

User Account

All Pages