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Instructions for the Microsoft Excel Templates by Rex A Schildhouse

Be advised, the template workbooks and worksheets are not protected. Overtyping any data may remove it.
Extensive detail and information is contained within the help function of Microsoft Excel and in the provided text. You should enter your name, date, instructor's name, and course into the cells at the top of the page. This information will be printed on the top of each page if the template requires more than one page. Each template is set to print with File Name, Page # of # Page(s), the print date, and the print time to assist in assembly of multiple pages. If more than one page is required by the template, manual page breaks have been set to provide consistent presentation. All of the cells have been correctly formatted for presentation and should not require any adjustment. For example, if the text requires one, two, or three significant digits in a presentation, the template has been set for that presentation in the appropriate cells. In general, the yellow highlighted cells are the cells which work and effort should be presented. These entries may include date(s), account title(s), values, memorandum appropriate to the entry, or text answers to questions. And information or data which may be required by the solution will be entered in cells with borders to help identify them. Where a yellow highlighted cell shows "Date" enter the appropriate date for that step of the challenge. This may be any date format that Microsoft Excel accepts. Some of these formats include "1/1/12", "01/01/12", and "01/01/2012." All of these will return January 01, 2012, in the format set in the template. Where a yellow highlighted cell shows "Acct Nbr" enter the appropriate account number, provided in the template and in the text for that step of the challenge. This is entry may be a "Look to" formula to another cell where that information has been provided or previously entered. Where a yellow highlighted cell shows "Account Title" enter the appropriate account title for that step of the challenge. This is a text entry and most of those cells are set for the proper indentation for that step. Frequently the chart of accounts appropriate to the challenge is provided and you can use the "look to" formula to reference the appropriate account title without typing it. Check with your instructor to see if abbreviated account titles are acceptable. For example "A/R" for Accounts Receivable, "A/P" for Accounts Payable. If your instructor is using a comparison process between workbooks for grading, these abbreviates may not be acceptable. Where a yellow highlighted cell shows titles such as "Values," "Amounts," or "Quantities" enter the appropriate numerical value for that step of the challenge. The cell is formatted for proper presentation of the entered information. If a dollar sign is appropriate, it should not be entered, Microsoft Excel will place it there through formatting. Commas and significant digits (decimals) are also set through formatting for common presentation. Since the formatting of the templates is not protected by any password, you may change any of the formatting found in the templates to meet your desires. Where a yellow highlighted cell shows titles such as "Formula" you may enter the appropriate formula or enter a numerical value appropriate for that step of the challenge. Most of the values necessary for the appropriate formula are located on the template in cells with borders or in other yellow highlighted cells. The formula may be a simple "Look to" formula, an equal sign and a cell reference, "=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. These are addressed in the tutorial text provided for Microsoft Excel.

Where a yellow highlighted cell shows titles such as "Formula" you may enter the appropriate formula or enter a numerical value appropriate for that step of the challenge. Most of the values necessary for the appropriate formula are located on the template in cells with borders or in other yellow highlighted cells. The formula may be a simple "Look to" formula, an equal sign and a cell reference, "=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. These are addressed in the tutorial text provided for Microsoft Excel. Where a yellow highlighted cell shows "Text" enter the appropriate text for that step of the challenge. This may be a memorandum entry for a journal entry or a lengthy text answer discussing the results of an analysis of a company's financials. These titles can simply be typed over. Where a yellow highlighted cell shows titles such as "Journal Number" or "Journ #" you should enter the appropriate number provided in the template and in the text for that step of the challenge. In general this will appear in instances such as "Record the following events in General Journal number six." The print area is defined to fit onto 8 1/2" 11" sheets in portrait or landscape mode as required. Margins are generally set to no less than 1/2" so most printers can print them without a problem. If you printer cannot accept margins less than 1" you may have to reformat the margins through Page Setup. The display may have "Freeze Pane" invoked so column titles remain visible during data entry. This can be removed by utilizing the View menu and selecting "Unfreeze Panes" under "Freeze Panes." When negative values are required, enter them by starting with a minus sign, "-". Negative values may be shown as ($400) or -$400. Negative values in formulas can be created by putting a minus sign in front of the cell reference - "=E10*-E11" will return a negative value if both cells E10 and E11 contain positive values. Microsoft Office and Microsoft Excel are products of, and copyrighted by, Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052-6399

Solution Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E21-3 (Lessee Entries, Capital Lease with Executory Costs and Unguaranteed Residual Value) Assume that on January 1, 2012, Kimberly-Clark Corp. signs a 10-year noncancelable lease agreement to lease a storage building from Trevino Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $90,000 beginning on January 1, 2012. 2. The fair value of the building on January 1, 2012, is $550,000 3. The building has an estimated economic life of 12 years, with an unguaranteed residual value of $10,000 Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark's incremental borrowing rate is 12% per year. The lessor's implicit rate is not known by Kimberly-Clark. 6. The yearly rental payment includes $3,088.14 of executory costs related to taxes on the property. Instructions: Prepare the journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2012 and 2013. Kimberly-Clarks corporate year end is December 31. Capitalized amount of the lease: Yearly payment Executory costs Minimum annual lease payment

90,000.00 3,088.14 86,911.86

Present value of minimum lease payments = $549,999.96 Jan 1, 12 Leased Building Lease Liability Executory Costs Lease Liability Cash Depreciation Expense ($550,000 / 10 years) Accumulated Depreciation - Capital Leases Interest Expense Interest Payable (See Schedule 1) Executory Costs - Property Taxes Interest Payable Lease Liability Cash Depreciation Expense Accumulated Depreciation - Capital Leases 550,000.00 550,000.00 3,088.14 86,911.86 90,000.00 55,000.00 55,000.00 55,570.58 55,570.58 3,088.14 55,570.58 31,341.28 90,000.00 55,000.00 55,000.00

Jan 1, 12

Dec 31, 12

Dec 31, 12

Jan 1, 13

Dec 31, 13

153010963.xlsx.ms_office, Exercise 21-3 Solution, Page 3 of 21, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: Dec 31, 13 Accounting Interest Expense 51,809.62 Intermediate , 14th Edition by Kieso, Weygandt, and Warfield
Interest Payable Schedule 1: KIMBERLY-CLARK CORPORATION (Lessee) Lease Amortization Schedule Annual Payment Less Executory Costs Annual Payment Reduction Less Interest of Executory (12%) Lease Lease Date Costs on Liability Liability Liability Jan 1, 12 550,000.00 Jan 1, 12 86,911.86 0.00 86,911.86 463,088.14 Jan 1, 13 86,911.86 55,570.58 31,341.28 431,746.86 Jan 1, 14 86,911.86 51,809.62 35,102.24 396,644.62 51,809.62

153010963.xlsx.ms_office, Exercise 21-3 Solution, Page 4 of 21, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E21-3 (Lessee Entries, Capital Lease with Executory Costs and Unguaranteed Residual Value) Assume that on January 1, 2012, Kimberly-Clark Corp. signs a 10-year noncancelable lease agreement to lease a storage building from Trevino Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $90,000 beginning on January 1, 2012. 2. The fair value of the building on January 1, 2012, is $550,000 3. The building has an estimated economic life of 12 years, with an unguaranteed residual value of $10,000 Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark's incremental borrowing rate is 12% per year. The lessor's implicit rate is not known by Kimberly-Clark. 6. The yearly rental payment includes $3,088.14 of executory costs related to taxes on the property. Instructions: Prepare the journal entries on the lessees books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2012 and 2013. Kimberly-Clarks corporate year end is December 31. Capitalized amount of the lease: Yearly payment Executory costs Minimum annual lease payment

Amount Amount Formula

Use the Excel Present Value (=PV) formula to determine the present value. Jan 1, 12 Account Title Account Title Account Title Account Title Account Title Account Title Account Title Account Title Account Title Account Title Account Title Account Title Account Title Account Title Account Title Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount

Jan 1, 12

Dec 31, 12

Dec 31, 12

Jan 1, 13

Dec 31, 13

153010963.xlsx.ms_office, Exercise 21-3, Page 5 of 21, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Dec 31, 13 Accounting Account Title , 14th Edition by Kieso, Weygandt, and Warfield Amount Intermediate
Account Title Schedule 1: KIMBERLY-CLARK CORPORATION (Lessee) Lease Amortization Schedule Annual Payment Less Executory Costs Annual Payment Reduction Less Interest of Executory (12%) Lease Lease Date Costs on Liability Liability Liability Jan 1, 12 Amount Jan 1, 12 Amount Amount Formula Formula Jan 1, 13 Amount Formula Formula Formula Jan 1, 14 Amount Formula Formula Formula Amount

153010963.xlsx.ms_office, Exercise 21-3, Page 6 of 21, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E21-6 (Lessor Entries, Sales-Type Lease) Wadkins Company, a machinery dealer, leased a machine to Romero Corporation on January 1, 2012. The lease is for an 8 -year period and requires equal annual payments of $38,514 at the beginning of each year. The first payment is received on January 1, 2012. Wadkins had purchased the machine during 2011 for Collectibility of lease payments is reasonably predictable, and no important $170,000 uncertainties surround the amount of costs yet to be incurred by Wadkins. Wadkins set the annual 11% rental to ensure an rate of return. The machine has an economic life of 10 years with no residual value and reverts to Wadkins at the termination of the lease. Instructions: (a) Compute the amount of the lease receivable. (Use the Excel Present Value formula "=PV(" to solve.) The present value of the lease receivable is = $220,000 (b) Prepare all necessary journal entries for Wadkins for 2012. Jan 1, 12 Lease Receivable Cost of Goods Sold Sales Revenue Inventory Cash Lease Receivable Interest Receivable Interest Revenue [($220,000 $38,514) 11.00%] 220,000 170,000 220,000 170,000 38,514 38,514 19,963 19,963

Jan 1, 12

Dec 31, 12

153010963.xlsx.ms_office, Exercise 21-6 Solution, Page 7 of 21, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
E21-6 (Lessor Entries, Sales-Type Lease) Wadkins Company, a machinery dealer, leased a machine to Romero Corporation on January 1, 2012. The lease is for an 8 -year period and requires equal annual payments of $38,514 at the beginning of each year. The first payment is received on January 1, 2012. Wadkins had purchased the machine during 2011 for Collectibility of lease payments is reasonably predictable, and no important $170,000 uncertainties surround the amount of costs yet to be incurred by Wadkins. Wadkins set the annual 11% rental to ensure an rate of return. The machine has an economic life of 10 years with no residual value and reverts to Wadkins at the termination of the lease. Instructions: (a) Compute the amount of the lease receivable. (Use the Excel Present Value formula "=PV(" to solve.) Use this area to enter the Present Value formula (b) Prepare all necessary journal entries for Wadkins for 2012. Jan 1, 12 Account Title Account Title Account Title Account Title Account Title Account Title Account Title Account Title Amount Amount Amount Amount Amount Amount Amount Amount

Jan 1, 12

Dec 31, 12

153010963.xlsx.ms_office, Exercise 21-6, Page 8 of 21, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: th Intermediate Accounting, 14 Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P21-4 (Balance Sheet and Income Statement DisclosureLessee) The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system. Inception date: Lease term: Economic life of lease equipment: Fair value of asset at October 1, 2012: Residual value at end of lease term: Lessor's implicit rate: Lessee's incremental borrowing rate: Annual lease payment due at the beginning of each year, beginning with October 1, 2012: October 1, 2012 6 years 6 years $300,383 0 10% 10% $62,700

The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs, which amount to $5,500 per year, and are paid each October 1, beginning October 1, 2012. (This $5,500 is not included in the rental payment of $62,700.) The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment. The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a capital lease by the lessee and as a direct-finance lease by the lessor. Interest (10%) on Unpaid Reduction of Balance of Liabililty / Lease Liability Lease Liability Receivable: / Receivable: / Receivable: 300,383 62,700 237,683 23,768 38,932 198,751 19,875 42,825 155,926 15,593 47,107 108,819 10,882 51,818 57,001 5,699* 57,001 0 70,118 300,383

62,700 62,700 62,700 62,700 62,700 62,700 376,200 *Rounding error is $1.

Date: 10/01/12 10/01/12 10/01/13 10/01/14 10/01/15 10/01/16 10/01/17

Annual lease Payment / Receipt:

Instructions: (Round to whole dollars.) (a) Assuming the lessee's accounting period ends on September 30, answer the following questions with respect to this lease agreement:

153010963.xlsx.ms_office, Problem 21-4 Solution, Page 9 of 21, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: th (1) What items Accounting and amounts will appear onby the lessee's income statement for the year ending Intermediate , 14 Edition Kieso, Weygandt, and Warfield
September 30, 2013? Interest expense (See amortization schedule) Lease executory expense Depreciation expense ($300,383 6) $23,768 $5,500 $50,064

(2) What items and amounts will appear on the lessee's balance sheet at September 30, 2013? Current liabilities: Lease liability Interest payable Long-term liabilities: Lease liability Property, plant, and equipment: Leased equipment Accumulated depreciation

$38,932 $23,768

$198,751

$300,383 ($50,064)

(3) What items and amounts will appear on the lessee's income statement for the year ending September 30, 2014? Interest expense (See amortization schedule) Lease executory expense Depreciation expense ($300,383 6) $19,875 $5,500 $50,064

(4) What items and amounts will appear on the lessee's balance sheet at September 30, 2014? Current liabilities: Lease liability Interest payable Long-term liabilities: Lease liability Property, plant, and equipment: Leased equipment Accumulated depreciation

$42,825 $19,875

$155,926

$300,383 ($100,128)

(b) Assuming the lessee's accounting period ends on December 31, answer the following questions with respect to this lease agreement: (1) What items and amounts will appear on the lessee's income statement for the year ending December 31, 2012? Interest expense [$23,768 (3/12)] Lease executory expense [$5,500 (3/12)] Depreciation expense (Note that cells G91 and G92 show explanations for the partial year computation.) $5,942 $1,375 $12,516

153010963.xlsx.ms_office, Problem 21-4 Solution, Page 10 of 21, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: th Intermediate Accounting, 14 Edition by Kieso, Weygandt, and Warfield
(2) What items and amounts will appear on the lessee's balance sheet at December 31, 2012? Current liabilities: Lease liability Interest payable Long-term liabilities: Lease liability Property, plant, and equipment: Leased equipment Accumulated depreciation Current assets: Prepaid lease executory costs [$5,500 (9/12)]

$38,932 $5,942

$198,751

$300,383 ($12,516)

$4,125

(3) What items and amounts will appear on the lessee's income statement for the year ending December 31, 2013? Interest expense [($23,768 - $5,942) + ($19,875 (3/12))] Lease executory expense Depreciation expense ($300,383 6) (4) What items and amounts will appear on the lessee's balance sheet at December 31, 2013? Current liabilities: Lease liability Interest expense [$19,875 (3/12)] Long-term liabilities: Lease liability Property, plant, and equipment: Leased computer under capital lease Accumulated depreciation ($12,516 + $50,064) Current assets: Prepaid lease executory costs [$5,500 (9/12)] $22,795 $5,500 $50,064

$42,825 $4,969

$155,926

$300,383 ($62,580)

$4,125

153010963.xlsx.ms_office, Problem 21-4 Solution, Page 11 of 21, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: th Intermediate Accounting, 14 Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P21-4 (Balance Sheet and Income Statement DisclosureLessee) The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system. Inception date: Lease term: Economic life of lease equipment: Fair value of asset at October 1, 2012: Residual value at end of lease term: Lessor's implicit rate: Lessee's incremental borrowing rate: Annual lease payment due at the beginning of each year, beginning with October 1, 2012: The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs, which amount to $5,500 per year, and are paid each October 1, beginning October 1, 2012. (This $5,500 is not included in the rental payment of $62,700.) The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment. The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a capital lease by the lessee and as a direct-finance lease by the lessor. Interest (10%) on Unpaid Reduction of Balance of Liabililty / Lease Liability / Lease Liability / Receivable: Receivable: Receivable: 300,383 62,700 237,683 23,768 38,932 198,751 19,875 42,825 155,926 15,593 47,107 108,819 10,882 51,818 57,001 5,699* 57,001 0 70,118 300,383

62,700 62,700 62,700 62,700 62,700 62,700 376,200 *Rounding error is $1.

Date: 10/01/12 10/01/12 10/01/13 10/01/14 10/01/15 10/01/16 10/01/17

Annual lease Payment / Receipt:

Instructions: (Round to whole dollars.) (a) Assuming the lessee's accounting period ends on September 30, answer the following questions with respect to this lease agreement:

153010963.xlsx.ms_office, Problem 21-4, Page 12 of 21, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: th (1) What items Accounting and amounts will appear on by the lessee's income statement for the year ending Intermediate , 14 Edition Kieso, Weygandt, and Warfield
September 30, 2013? Account Title Account Title Account Title Amount Amount Amount

(2) What items and amounts will appear on the lessee's balance sheet at September 30, 2013? Title Account Title Account Title Title Account Title Title Account Title Account Title

Amount Amount

Amount

Amount Amount

(3) What items and amounts will appear on the lessee's income statement for the year ending September 30, 2014? Account Title Account Title Account Title Amount Amount Amount

(4) What items and amounts will appear on the lessee's balance sheet at September 30, 2014? Title Account Title Account Title Title Account Title Title Account Title Account Title

Amount Amount

Amount

Amount Amount

(b) Assuming the lessee's accounting period ends on December 31, answer the following questions with respect to this lease agreement: (1) What items and amounts will appear on the lessee's income statement for the year ending December 31, 2012? Account Title Account Title Account Title Amount Amount Amount

153010963.xlsx.ms_office, Problem 21-4, Page 13 of 21, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: th Intermediate Accounting, 14 Edition by Kieso, Weygandt, and Warfield
(2) What items and amounts will appear on the lessee's balance sheet at December 31, 2012? Title Account Title Account Title Title Account Title Title Account Title Account Title Title Account Title

Amount Amount

Amount

Amount Amount

Amount

(3) What items and amounts will appear on the lessee's income statement for the year ending December 31, 2013? Account Title Account Title Account Title (4) What items and amounts will appear on the lessee's balance sheet at December 31, 2013? Title Account Title Account Title Title Account Title Title Account Title Account Title Title Account Title

Amount Amount

Amount

Amount Amount

Amount

153010963.xlsx.ms_office, Problem 21-4, Page 14 of 21, 6/20/2013, 6:59 AM

g facts pertain to a Electronics, a lessee, for a

October 1, 2012 6 years 6 years $300,383 0 10% 10% $62,700

mportant uncertainties

year, and are paid each ment of $62,700.) The asset ethod is used for all

lessor and the lessee in e by the lessee and as a

owing questions

153010963.xlsx.ms_office, Problem 21-4, Page 15 of 21, 6/20/2013, 6:59 AM

year ending

ber 30, 2013?

year ending

ber 30, 2014?

owing questions

year ending

153010963.xlsx.ms_office, Problem 21-4, Page 16 of 21, 6/20/2013, 6:59 AM

er 31, 2012?

year ending

Amount Amount Amount

er 31, 2013?

153010963.xlsx.ms_office, Problem 21-4, Page 17 of 21, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P21-5 (Balance Sheet and Income Statement DisclosureLessor) The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system. Inception date: Lease term: Economic life of lease equipment: Fair value of asset at October 1, 2012: Residual value at end of lease term: Lessor's implicit rate: Lessee's incremental borrowing rate: Annual lease payment due at the beginning of each year, beginning with October 1, 2012: October 1, 2012 6 years 6 years $300,383 0 10% 10% $62,700

The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs, which amount to $5,500 per year, and are paid each October 1, beginning October 1, 2012. (This $5,500 is not included in the rental payment of $62,700.) The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment. The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a capital lease by the lessee and as a direct-finance lease by the lessor. Annual lease Payment / Receipt: 62,700.00 62,700.00 62,700.00 62,700.00 62,700.00 62,700.00 376,200.00 Interest (10%) Reduction of Balance of on Unpaid Lease Liability Lease Liability Liability / / Receivable: / Receivable: Receivable: 300,383.00 62,700.00 237,683.00 23,768.30 38,931.70 198,751.30 19,875.13 42,824.87 155,926.43 15,592.64 47,107.36 108,819.07 10,881.91 51,818.09 57,000.98 5,699.02 57,000.98 0.00 75,817.00 300,383.00

Date: 10/01/12 10/01/12 10/01/13 10/01/14 10/01/15 10/01/16 10/01/17

Instructions: (Round to whole dollars.) (a) Assuming the lessor's accounting period ends on September 30, answer the following questions with respect to this lease agreement: (1) What items and amounts will appear on the lessor's income statement for the year ending September 30, 2013? Interest revenue $23,768

153010963.xlsx.ms_office, Problem 21-5 Solution, Page 18 of 21, 6/20/2013, 6:59 AM

Solution Name: Date: Instructor: Course: th (2) What items Accounting and amounts will appear on by the lessor's balance sheet at September 30, 2013? Intermediate , 14 Edition Kieso, Weygandt, and Warfield
Current assets: Lease receivable Interest receivable Noncurrent assets: Lease receivable (net investment) $38,932 $23,768

$198,751

(3) What items and amounts will appear on the lessor's income statement for the year ending September 30, 2014? Interest revenue $19,875 (4) What items and amounts will appear on the lessor's balance sheet at September 30, 2014? Current assets: Lease receivable Interest receivable Noncurrent assets: Lease receivable (net investment)

$42,825 $19,875

$155,926

(b) Assuming the lessor's accounting period ends on December 31, answer the following questions with respect to this lease agreement: (1) What items and amounts will appear on the lessor's income statement for the year ending December 31, 2012? Interest revenue [$23,768 (3/12)] $5,942 (2) What items and amounts will appear on the lessor's balance sheet at December 31, 2012? Current assets: Lease receivable Interest receivable Noncurrent assets: Lease receivable

$38,932 $5,942

$44,874

$198,751

(3) What items and amounts will appear on the lessor's income statement for the year ending December 31, 2013? Interest revenue [($23,768 - $5,942) + ($19,875 (3/12))] $22,795 (4) What items and amounts will appear on the lessor's balance sheet at December 31, 2013? Current assets: Lease receivable Interest receivable Noncurrent assets: Lease receivable

$42,825 $4,969

$47,794

$155,926

153010963.xlsx.ms_office, Problem 21-5 Solution, Page 19 of 21, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: Intermediate Accounting, 14th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse
P21-5 (Balance Sheet and Income Statement DisclosureLessor) The following facts pertain to a noncancelable lease agreement between Alschuler Leasing Company and McKee Electronics, a lessee, for a computer system. Inception date: Lease term: Economic life of lease equipment: Fair value of asset at October 1, 2012: Residual value at end of lease term: Lessor's implicit rate: Lessee's incremental borrowing rate: Annual lease payment due at the beginning of each year, beginning with October 1, 2012: October 1, 2012 6 years 6 years $300,383 0 10% 10% $62,700

The collectibility of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs, which amount to $5,500 per year, and are paid each October 1, beginning October 1, 2010. (This $5,500 is not included in the rental payment of $62,700.) The asset will revert to the lessor at the end of the lease term. The straight-line depreciation method is used for all equipment. The following amortization schedule has been prepared correctly for use by both the lessor and the lessee in accounting for this lease. The lease is to be accounted for properly as a capital lease by the lessee and as a direct-finance lease by the lessor. Annual lease Payment / Receipt: 62,700.00 62,700.00 62,700.00 62,700.00 62,700.00 62,700.00 376,200.00 Interest (10%) Reduction of Balance of on Unpaid Lease Liability Lease Liability Liability / / Receivable: / Receivable: Receivable: 300,383.00 62,700.00 237,683.00 23,768.30 38,931.70 198,751.30 19,875.13 42,824.87 155,926.43 15,592.64 47,107.36 108,819.07 10,881.91 51,818.09 57,000.98 5,699.02 57,000.98 0.00 75,817.00 300,383.00

Date: 10/01/12 10/01/12 10/01/13 10/01/14 10/01/15 10/01/16 10/01/17

Instructions: (Round to whole dollars.) (a) Assuming the lessor's accounting period ends on September 30, answer the following questions with respect to this lease agreement: (1) What items and amounts will appear on the lessor's income statement for the year ending September 30, 2013? Account Title Amount

153010963.xlsx.ms_office, Problem 21-5, Page 20 of 21, 6/20/2013, 6:59 AM

Name: Date: Instructor: Course: th (2) What items Accounting and amounts will appear on by the lessor's balance sheet at September 30, 2013? Intermediate , 14 Edition Kieso, Weygandt, and Warfield
Title Account Title Account Title Title Account Title Amount Amount

Amount

(3) What items and amounts will appear on the lessor's income statement for the year ending September 30, 2014? Account Title Amount (4) What items and amounts will appear on the lessor's balance sheet at September 30, 2014? Title Account Title Account Title Title Account Title

Amount Amount

Amount

(b) Assuming the lessor's accounting period ends on December 31, answer the following questions with respect to this lease agreement: (1) What items and amounts will appear on the lessor's income statement for the year ending December 31, 2012? Account Title Amount (2) What items and amounts will appear on the lessor's balance sheet at December 31, 2012? Title Account Title Account Title Title Account Title

Amount Amount

Formula

Amount

(3) What items and amounts will appear on the lessor's income statement for the year ending December 31, 2013? Account Title Amount (4) What items and amounts will appear on the lessor's balance sheet at December 31, 2013? Title Account Title Account Title Title Account Title

Amount Amount

Formula

Amount

153010963.xlsx.ms_office, Problem 21-5, Page 21 of 21, 6/20/2013, 6:59 AM

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