Cullumber Company, as lessee, enters into a lease agreement on July 1, 2021, for equipment. The following data are relev

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Cullumber Company As Lessee Enters Into A Lease Agreement On July 1 2021 For Equipment The Following Data Are Relev 1 (69.7 KiB) Viewed 12 times

Cullumber Company, as lessee, enters into a lease agreement on July 1, 2021, for equipment. The following data are relevant to the lease agreement: 1. 2. 3. 4. 5. (a) Click here to view factor tables. (b) The term of the noncancelable lease is 4 years, with no renewal option. Payments of $875,010 are due on July 1 of each year. The fair value of the equipment on July 1, 2021 is $3,130,000. The equipment has an economic life of 6 years with no salvage value. Indicate the type of lease Cullumber Company has entered into and what accounting treatment is applicable. Cullumber depreciates similar machinery it owns on the sum-of-the-years'-digits basis. The lessee pays all executory costs. Cullumber's incremental borrowing rate is 11% per year. The lessee is aware that the lessor used an implicit rate of 8% in computing the lease payments. List of Accounts 1. Save for Later 2. 2 Prepare the journal entries on Cullumber's books that relate to the lease agreement for the following dates: (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 5,250.) July 1, 2021. December 31, 2021. Attempts: 0 of 1 used Submit Answer July 1 2022

(b) Prepare the journal entries on Cullumber's books that relate to the lease agreement for the following dates: (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 5,250.) 1. 2. 3. 4. July 1, 2021. December 31, 2021. July 1, 2022. December 31, 2022. Date Account Titles and Explanation (To record amortization.) (To record interest payment.) (To record amortization.) (To record interest payment.) Debit ] [] ][ E E