On January 1, 2017, Bridgeport Corporation signed a 5-year noncancelable lease for a machine. The te

On January 1, 2017, Bridgeport Corporation signed a 5-year noncancelable lease for a machine. The te

On January 1, 2017, Bridgeport Corporation signed a 5-year noncancelable lease for a machine. The terms of the lease called for Bridgeport to make annual payments of $8,215 at the beginning of each year, starting January 1, 2017. The machine has an estimated useful life of 6 years and a $5,200 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Bridgeport uses the straight-line method of depreciation for all of its plant assets. Bridgeport’s incremental borrowing rate is 10%, and the lessor’s implicit rate is unknown.

Compute the present value of the minimum lease payments. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

Prepare all necessary journal entries for Bridgeport for this lease through January 1, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Round answers to 0 decimal places e.g. 58,971.)

The present value of the minimum lease payments Credit Account Titles and Explanation Debit Date (To record the lease.) (To record first payment.) (To record depreciation.) (To record interest.) 1/1/18 (To record second payament.) Table 6.1 FUTURE VALUE OF 1 (FUTURE VALUE OF A SINGLE SUM) FVF = (1+i)” (n) Periods 290 2% % 3% 49% 5% 6% 1.03000 1.04000 1.05000 1.02000 1.02500 1.06000 1.04040 1.10250 1.12360 2 1.05063 1.06090 1.08160 3 1.06121 1.07689 1.09273 1.12486 1.15763 1.19102 1.21551 4 1.08243 1.10381 1.12551 1.16986 1.26248 1.10408 1.13141 1.15927 1.21665 1.27628 1.33823 6 1.12616 1.15969 1.19405 1.26532 1.34010 1.41852 1.14869 7 1.18869 1.22987 1.31593 1.40710 1.50363 15% (n) Periods 8% 9% 10% 11% 12% 1.08000 1.09000 1.10000 1.11000 1.12000 1.15000 1.23210 1.25440 1.32250 1.16640 118810 1.21000 2 1.25971 1.29503 133100 1.36763 1.40493 1.52088 1.36049 141158 1.46410 1.51807 1.57352 1.74901 1.46933 1.53862 1.61051 2.01136 1.68506 1.76234 1.58687 1.67710 1.77156 1.37041 1.97382 2.31306 6 1.82804 1.948S72 2.07616 1.71382 2.21068 2.66002 7 1.85093 1.99256 2.14359 2.30454 2.47596 3.05902 t Table 6.2 PRESENT VALU 'RESENT VALUE OF A SINGLE SUM 1 = (1 i) PVF (n) Periods 2% 2/4% 6% 3% 4% 5% 1 98039 97561 97087 96154 95238 94340 89000 2 96117 95181 94260 92456 90703 3 94232 92860 91514 88900 86384 83962 4 92385 90595 88849 85480 82270 .79209 74726 90573 88385 86261 82193 78353 6 S8797 86230 83748 79031 .74622 70496 7 87056 84127 81309 75992 71068 66506 8 85349 82075 78941 73069 67684 62741 83676 80073 76642 70259 64461 59190 10 82035 .78120 .74409 .67556 61391 55839 CN 15% (n) Periods 8% 9% 10% 11% 12% 92593 91743 90909 90090 89286 86957 85734 84168 82645 81162 .79719 75614 79383 77218 75132 73119 71178 65752 3 73503 70843 68301 65873 63552 57175 4 68058 6499362092 59345 56743 49718 5 63017 59627 56447 53464 50663 43233 6 58349 54703 51316 48166 45235 37594 54027 50187 46651 43393 40388 32690 8 50025 46043 42410 39092 36061 28426 9 46319 42241 38554 35218 32197 24719 10 st NO Table 6.3 FUTURE VALUE OF AN ORDINARY ANNUITY OF 1 (1+0-1 FVF-OA (n) Periods 2% 22% 3% 4% 5% 6% 1 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 2.05000 2.06000 2 2.02000 2.02500 2.03000 2.04000 3.09090 3 3.06040 3.07563 3.12160 3.15250 3.18360 4.15252 4.24646 4 4.12161 4.18363 4.31013 4.37462 5.63709 5 5.20404 5.25633 5.30914 5.41632 5.52563 6.63298 6.80191 6 6.30812 6.38774 6.46841 6.97532 7 7.54743 7.66246 7.89829 8.39384 7.43428 8.14201 8.58297 8 8.73612 8.89234 9.21423 9.54911 9.89747 10.58280 9 9.75463 9.95452 10.15911 11.02656 11.49132 10 10.94972 11.20338 11.46338 12.00611 12.57789 13.18079 (n) Periods 8% 10% 11% 12% 15% %6 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1 2.11000 2.15000 2.08000 2.09000 2.10000 2.12000 2 3.24640 3.27810 3.31000 3.34210 3.37440 3.47250 4.57313 4.50611 4.64100 4.70973 4.77933 4.99338 4 5.86660 5.98471 6.10510 6.22780 6.35285 6.74238 7.71561 7.91286 7.33592 7.52334 8.11519 8.75374 6 8.92280 9.20044 9.78327 10.08901 11.06680 9.48717 7 10.63663 11.02847 11.43589 11.85943 12.29969 13.72682 13.57948 14.16397 14.77566 16.78584 12.48756 13.02104 14.48656 15.19293 15.93743 16.72201 17.54874 20.30372 10 Table 6.4 PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 1 1 PVF-OA – (n) Periods 2% 22% 3% 4% 5% 6% 97087 94340 1 98039 97561 96154 95238 2 1.94156 1.92742 1.91347 1.88609 1.85941 1.83339 2.88388 2.85602 3 2.82861 2.77509 2.72325 2.67301 3.71710 4 3.80773 3.76197 3.62990 3.54595 3.46511 4.57971 4.32948 4.21236 5 4.71346 4.64583 4.45182 5.60143 6 5.50813 5.41719 5.24214 5.07569 4.91732 6.34939 6.23028 7 6.47199 6.00205 5.78637 5.58238 7.32548 7.17014 S 7.01969 6.73274 6.46321 6.20979 7.78611 8.16224 7.97087 7.43533 7.10782 6.80169 40 27.35548 25.10278 23.11477 19.79277 17.15909 15.04630 8% 9% 10% 11% 12% 15% (n) Periods 60606 90090 92593 91743 89286 86957 1 1.62571 1.78326 1.75911 1.73554 1.71252 1.69005 2 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 3 3.10245 3.31213 3.23972 3.16986 3.03735 2.85498 4 3.88965 3.99271 3.79079 3.69590 3.60478 3.35216 4.35526 4.62288 4.48592 4.23054 4.11141 3.78448 6 4.16042 5.20637 5.03295 4.86842 4.71220 4.56376 7 5.74664 5.53482 5.33493 5.14612 4.96764 4.48732 S 4.77158 6.24689 5.99525 5.75902 5.53705 5.32825 6.71008 6.41766 6.14457 5.88923 5.65022 5.01877 10 Table 6.5 PRESENT VALUE OF AN ANNUITY DUE OF 1 1- q4-1 PVF-AD 1+ (n) Periods 29% 2%% 3% 4% 5% 6% 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.95238 2 1.98039 1.97561 1.97087 1.96154 1.94340 2.88609 2 2.94156 2.92742 2.91347 2.85941 2.83339 3.85602 3.77509 4 3.88388 3.82861 3.72325 3.67301 4.80773 4.76197 4.71710 4.62990 4.54595 4.46511 5.71346 5.45182 5.21236 6 5.64583 5.57971 5.32948 6.60143 6.41719 5.91732 6.50813 6.24214 6.07569 7.23028 7,00205 6.58238 7.47199 7.34939 6.78637 8.17014 7.46321 8.32548 8.01969 7.73274 7.20979 8.97087 7.80169 10 9.16224 8.78611 8.43533 8.10782 S% 9% 10% 11% 12% 15% (n) Periods 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.92593 1.91743 1.90909 1.90090 1.89286 1.86957 2 2.78326 2.75911 2.73554 2.71252 2.69005 2.62571 3 3.57710 3.53130 3.48685 3.44371 3.40183 3.28323 4 4.10245 4.31213 4.23972 4.16986 4.03735 3.85498 4.99271 4.88965 4.79079 4.69590 4.60478 4.35216 6 5.35526 5.62288 5.48592 5.23054 5.11141 4.78448 7 5.71220 5.56376 5.16042 6.20637 6.03295 5.86842 6.74664 6.53482 6.33493 6.14612 5.96764 5.48732

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