On January 1, 2021, Allied Industries leased a high-performance conveyer to Karrier Company for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Allied. The equipment cost Allied $956,000 and has an expected useful life of five years. Allied expects the residual value at December 31, 2024, will be $300,000. Negotiations led to the lessee guaranteeing a $340,000 residual value. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) points Equal payments under the finance/sales-type lease are $200,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Karrier is aware that Allied used a 5% interest rate when calculating lease payments. Required:
1. Prepare the appropriate entries for both Karrier and Allied on January 1, 2021, to record the lease.
2. Prepare all appropriate entries for both Karrier and Allied on December 31, 2021, related to the lease. X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare the appropriate entries for both Karrier and Allied on January 1, 2021, to record the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar.) Debit Credit No 1 Date General Journal January 01, 2021 Right-of-use asset 742,098 Lease payable 742,098 2 988,908 676,282 X January 01, 2021 Lease receivable Cost of goods sold Sales revenue Equipment 862,020 X 862,020 < Required 1 Required 2 >
Required:
1. Prepare the appropriate entries for both Karrier and Allied on January 1, 2021, to record the lease.
2. Prepare all appropriate entries for both Karrier and Allied on December 31, 2021, related to the lease. Answer is complete but not entirely correct. points Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare all appropriate entries for both Karrier and Allied on December 31, 2021, related to the lease. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar.) No Date General Journal Debit Credit 1 December 31, 202 Lease payable 162,895 Interest expense 37,105 Cash 200,000 2 185,525 December 31, 204 Amortization expense Right-of-use asset 185,525 December 31, 202 Cash 200.000 Interest revenue Lease receivable 37,105 X 162,895 X < Required 1 Required 2 >