On January 1, 2024, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 3% of Taco King's sales revenue, with a quarterly sales minimum of $500,000. Payments at the beginning of each quarter are based on previous quarter sales. During the previous five-year period, Taco King has generated quarterly sales of over $700,000. Fogelman's interest rate, known by Taco King, was 4%. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of 51. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $3) Required: 1. Prepare the journal entries for Taco King at the beginning of the lease on January 1, 2024. 2. Prepare the journal entries for Taco King on April 1, 2024. First quarter sales were $710,000. Amortization is recorded quarterly.

On January 1, 2024, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 3% of Taco King's sales revenue, with a quarterly sales minimum of $500,000. Payments at the beginning of each quarter are based on previous quarter sales. During the previous five-year period, Taco King has generated quarterly sales of over $700,000. Fogelman's interest rate, known by Taco King, was 4%. Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of 51. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $3) Required: 1. Prepare the journal entries for Taco King at the beginning of the lease on January 1, 2024. 2. Prepare the journal entries for Taco King on April 1, 2024. First quarter sales were $710,000. Amortization is recorded quarterly.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 1P

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