Presented below are two independent situations

Flinthills Car Rental leased a car to Jayhawk Company for one year. terms of the operating lease agreement call for monthly payments of $500.
On January 1, 2020, Throm Inc. entered into an agreement to lease 20 computers from Drummond Electronics. The terms of the lease agreement require three annual rental payments of $20,000 (including 10% interest) beginning December 31, 2020. The present value of the three rental payments is $49,735. Throm considers this a capital lease.

Prepare the appropriate journal entry to be made by Jayhawk Company for the first lease payment
Prepare the journal entry to record the lease agreement on the books of Throm Inc. on January 1, 2020

Solution

Problems: Long-Term Liabilities

Problem-01: Long-Term Liabilities

On May 1, 2019, Herron Corp. issued $600,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2019, and pay interest annually on May 1. Financial statements...

Problem-02: Long-Term Liabilities

Kershaw Electric sold $6,000,000, 10%, 10-year bonds on January 1, 2019. The bonds were dated January 1, 2019, and paid interest on January 1. The bonds were sold at 98....

Problem-03: Long-Term Liabilities

The following section is taken from Mareska's balance sheet at December 31, 2020. Bond interest is payable annually on January 1. The bonds are callable on any annual interest date....

Problem-04: Long-Term Liabilities

Talkington Electronics issues a $400,000, 8%, 15-year mortgage note on December 31, 2018. The proceeds from the note are to be used in financing a new research laboratory. The terms...

Problem-05: Long-Term Liabilities

Presented below are three different lease transactions that occurred for Ruggiero Inc. in 2020. Assume that all lease contracts start on January 1, 2020. In no case does Ruggiero receive...

Problem-06: Long-Term Liabilities

Paris Electric sold $3,000,000, 10%, 10-year bonds on January 1, 2019. The bonds were dated January 1 and pay interest annually on January 1. Paris Electric uses the straight-line method...

Problem-07: Long-Term Liabilities

Saberhagen Company sold $3,500,000, 8%, 10-year bonds on January 2020. The bonds were dated January 1, 2020 and pay interest annually on January Saberhagen Company uses the straight-line method to...

Problem-08: Long-Term Liabilities

The following is taken from the Colaw Company balance sheet. Interest is payable annually on January 1. The bonds are callable on any annual interest date. Colaw uses straight-line amortization...

Problem-09: Long-Term Liabilities

On January 1, 2021, Lock Corporation issued $1,800,000 face value, 5%, 10-year bonds at $1,667,518. This price resulted in an effective-interest rate of 6% on the bonds. Lock uses the...

Problem-10: Long-Term Liabilities

On January 1, 2021, Jade Company issued $2,000,000 face value, 7%, 10-year bonds at $2,147,202. This price resulted in a 6% effective-interest rate on the bonds. Jade uses the effective-interest...

Problem-11: Long-Term Liabilities

On January 1, 2019, Klosterman Company issued $500,000, 10%, 10-year bonds at face value. Interest is payable annually on January 1. Instructions Prepare the journal entries to record the following...

Problem-12: Long-Term Liabilities

On January 1, 2019, Forrester Company issued $400,000, 8%, 5-year bonds at face value. Interest is payable annually on January 1. Instructions Prepare the journal entries to record the following...

Problem-13: Long-Term Liabilities

Laudie Company issued $400,000 of 9%, 10-year bonds on January 1, 2019, at face value. Interest is payable annually on January 1, 2020.Instructions Prepare the journal entries to record the...

Problem-14: Long-Term Liabilities

Swisher Company issued $2,000,000 of bonds on January 1, 2019. Instructions Prepare the journal entry to record to record the issuance of the bonds if they are issued as (1)...

Problem-15: Long-Term Liabilities

Whitmore Company issued $500,000 of 5-year, 8% bonds at 97 on January 1, 2021. the bonds pay interest annually. Instructions Prepare the journal entry to record the issuance of the...

Problem-16: Long-Term Liabilities

The following section is taken from Ohlman Corp's balance sheet at December 31, 2020 Bond interest is payable annually on January 1. The bonds are callable on any interest date....

Problem-17: Long-Term Liabilities

Presented below are three independent situations. Longbine Corporation redeemed $130,000 face value, 12% bonds on June 30, 2021, at 102. The carrying value of the bonds at the redemption date...

Problem-18: Long-Term Liabilities

Jernigan Co. receives $300,000 when it issues a $3000,000, 10%, mortgage ote payable to finance the construction of a building at December 31, 2019. The terms provide for annual installment...

Problem-19: Long-Term Liabilities

Dreiling Company borrowed $300,000 on January 1, 2019, by issuing a $300,000, 8% mortgage note payable. The terms call for annual installment payments of $40,000 on December 31. Instructions Prepare...

Problem-20: Long-Term Liabilities

The adjusted trial balance for Karr Farm Corporation at the end of the current year contained the following accounts. Interest Payable$9,000 Lease Liability89,500 Bonds Payable, due 2027180,000 Premium on Bonds...

Problem-21: Long-Term Liabilities

Gilliland Airlines is considering two alternatives for the financing of a purchase of fleet of airplanes. These two alternatives are: Issue 90,000 shares f common stock at $30 per share....

Problem-22: Long-Term Liabilities

Hatfield Corporation reports the following amounts in its 2019 financial statements: Compute the December 31, 2020, balance in stockholders' equity Compute the debt to assets ratio at December 31, 2020....

Problem-23: Long-Term Liabilities

Presented below are two independent situations Flinthills Car Rental leased a car to Jayhawk Company for one year. terms of the operating lease agreement call for monthly payments of $500....

Problem-24: Long-Term Liabilities

Adcock Company issued $600,000, 9%, 20-year bonds on January 1, 2019, at 103. interest is payable annually on January 1. Adcock uses straight-line amortization for bond premium or discount. Instructions...

Problem-25: Long-Term Liabilities

Gridley Company issued $800,000, 11%, 10-year bonds on December 31, 2020, for $730,000. Interest is payable annually on December 31. Gridley Company uses the straight-line method to amortize bond premium...

Problem-26: Long-Term Liabilities

Lorance Corporation issued $400,000, 7%, 20-year bonds on January 1, 2020, for $360,727. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on...

Problem-27: Long-Term Liabilities

LRNA Company issued $380,000, 7%, 10-year bonds on January 1, 2020, for $407,968. This price resulted in an effective-interest rate of 6% on the bonds. Interest is payable annually on...

Long-Term Liabilities

Problem-23: Long-Term Liabilities

Solution

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