Problem:
On March 6, 2013, Sargento Cheese Co. leased a copier from computer leasing. The term of the lease was 3 years, equal payments with the first payment due March, 6 2013. Sargento's normal borrowing rate is 8%. Sargento uses the straight line dep. method, no salvage value, 3 yrs life. Sagrento's fiscal yr end is Sept. 30, 2013.
Computer leasing purchased the machine from Copier's "R" Us. They use the double declining balance method, 35,000 salvage value, & 5 yr life for all dep. assets. Copiers "R" Us sells this copier for 345,000, and makes normal gross profit of 40%. Computer leasing has a fiscal yr end of June 30, 2013.
Required to do:
1. Record all JE for Sargento for their yr ending 2013 involving the lease and any adjusting entries.
2. From those JE, show the account and its balance that would be reported on the:
- Income statement
- Statement of cash flow
- Balance sheet.
3. Record all JE for computer leasing for their yr ending 2013 involving the lease and any adjusting entries.
4. From those JE, show the acct. and its balance that would be reported on the:
- Income statement
- Statement of cash flow
- Balance Sheet