question archive Landon Corporation has decided to rent crew trucks rather than purchasing them

Landon Corporation has decided to rent crew trucks rather than purchasing them

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Landon Corporation has decided to rent crew trucks rather than purchasing them. On April 1, 20X5, Landon enters into an agreement with TuffEnough Trucks to lease three trucks worth $200,000. The lease agreement will span six years and the life of the trucks is estimated to be seven years. Landon’s incremental borrowing rate is 6 percent. The payments per year amount to $38,370, payable each April 1, beginning with 20X5.

a. Record the capital lease.

b. Record the first payment on 4/1/X5.

c. Record depreciation on the equipment on 12/31/X5.

d. Record interest expense on 12/31/X5.

e. Record the second payment on 4/1/X6.

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