On January 1, 2018, Duncan-Lang Services, Inc

question 50

Essay

On January 1, 2018, Duncan-Lang Services, Inc. a computer software training firm, leased several computers under a two-year operating lease agreement from Neble Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $40,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Neble at a cost of $360,000 and were expected to have a useful life of five years with no residual value. Appropriate adjusting entries are recorded at the end of each quarter.
Required: Prepare the appropriate journal entries for both (a) the lessee and (b) the lessor from the beginning of the lease through the end of 2018. Round your answers to the nearest whole dollar amounts.

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Definitions:

Budgeted Purchases

An estimate of the total purchases a business plans to make during a certain time period.

Amount Collected

The total money received or gathered from various sources, such as payments or sales.

Direct Materials Purchases

The acquisition of raw materials that are directly incorporated into a finished product during the manufacturing process.

Budgeted Cash Disbursements

An estimation of all cash payments that a business expects to make over a specified period, often part of a cash flow forecast or budget.