Exhibit 20-5 the Baltimore, Inc

question 86

Multiple Choice

Exhibit 20-5 The Baltimore, Inc. entered into a five-year lease with the Waugh Chapel Company on January 1, 2014. Baltimore, the lessor, will require that five equal annual payments of $25,000 be made at the beginning of each year. The first payment will be made on January 1, 2014. The lease contains a bargain purchase option price of $12,000, which the lessee may exercise on December 31, 2018. The lessee pays all executory costs. The cost of the leased property and its normal selling price are $95,000 and $118,236, respectively. Collectibility of the future lease payments is reasonably assured, and the lessor does not expect to incur any future costs related to the lease. Present value factors for a 7% interest rate are as follows:
-Refer to Exhibit 20-5. If Baltimore requires a 7% annual return, what is the correct amount that should be credited to Unearned Interest: Leases on January 1, 2014, by Baltimore? (Round the answer to the nearest dollar.)

• A) $15,320
• B) $18,764
• C) $22,495
• D) $43,236

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Definitions:

High Narcissism

A personality trait characterized by an inflated sense of self-importance, need for admiration, and a lack of empathy for others.

Cognitive Ability

The capacity to perform mental processes of perception, memory, judgment, and reasoning, affecting how well someone can learn and solve problems.

High Integrity

The quality of being honest and having strong moral principles.

Work Modes

Various approaches or methods adopted by individuals or groups in accomplishing tasks and achieving objectives in a work environment.