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On December 20, the company paid cash for machinery, $260,000,
subject to a 2% cash discount, and freight on machinery of $10,500.
1. On January 1, 2007, Jamona Corp. signed a five-year non-
cancelable lease for a machine. The terms of the lease called for
Jamona to make annual payments of $8,668 at the beginning of
each year, starting January 1, 2007. The machine has an estimated
useful life of six years and a $5,000 un-guaranteed residual value.
The machine reverts to the lessor at the end of the lease term.
Jamona uses the straight-line method of depreciation for all of its
plant assets. Jamona’s incremental borrowing rate is 10%, and the
lessor’s implicit rate is unknown.
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Prepare journal entries with appropriate supporting detailed
schedules for the balance sheet items: investments, inventory,
fixed assets, and capital leases.
Prepare appropriate note disclosures.
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ACC 545 Week 3 Team Balance Sheet Stockholder’s Section
Discussion
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