Reference no: EM132972119

Problem 1: Working with the assumptions that the residual value was guaranteed by the lessee and that you are now at January 1, 2029. On that date, the fair market value of the equipment was determined to be $9,450. The required journal entry/entries prepared by WIN, to record all the effects of the lease ending would be

Option a. DEBIT-Accumulated Depreciation - Leased Asset [$226,479]; DEBIT-Loss on Return of Leased Asset [$14,150]; DEBIT-Interest Payable [$1,748]; DEBIT Obligation Under Capital Lease [$21,852]; CREDIT-Right of Use Assets [$250,079]; CREDIT-Cash [$14,150].

Option b. DEBIT-Loss On Return Of Leased Asset [$14,150]; CREDIT-Cash [$14,150].

Option c. DEBIT-Obligation Under Capital Lease [$250,079]; DEBIT-Loss on Return of Leased Asset [$14,150]; CREDIT-Right of Use Assets [$250,079]; CREDIT-Cash [$14,150].

Option d. DEBIT-Obligation Under Capital Lease [$21,852]; CREDIT-Right of Use Assets [$7,702]; CREDIT-Cash [$14,150].

Option e. No journal entry required.