Lance Corporation, a Public Corporation, Entered into the Following Transactions

question 21

Essay

Lance Corporation, a public corporation, entered into the following transactions:
1. On January 1, 2021, Gagne Car Rental leased a car to Lance Corporation for one year. Terms of the operating lease call for monthly payments of $ 550.
2. On January 1, 2021, Lance Corporation entered into an agreement to lease 20 machines with a fair market value of $ 160,000 from Wells Corporation. The terms of the lease agreement require an initial payment of $ 50,000 and then three annual rental payments of $ 60,000 beginning on December 31, 2021. The present value of the three rental payments is $ 149,211.
Instructions
a) Identify each lease as either operating or finance.
b) Prepare the appropriate journal entries to be made by Lance Corporation on January 1 related to the lease transactions.

Understand the concept of process capability index and its application in evaluating process performance relative to specifications.

Understand the fundamental principles of accounting, including the going concern assumption and the business entity assumption.

Identify which accounts contribute to the calculation of net income and understand how different transactions affect it.

Analyze and calculate changes in equity from given financial information.

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Definitions:

MRP Schedule

An MRP (Marginal Revenue Product) schedule outlines how a change in the quantity of input affects the revenue from the sale of additional output.

Real Wages

Wages adjusted for inflation, representing the purchasing power of income earned from work.

Legal Minimum Wage

The lowest hourly, daily, or monthly remuneration that employers are legally allowed to pay their workers.

Equilibrium Wage Rate

The wage rate at which the quantity of labor demanded equals the quantity of labor supplied.