To raise operating funds, Coyne Incorporated sold its office building to an insurance company on January 1, 2021, for $1,600,000 and immediately leased the building back. The operating lease is for 12 years of the building's estimated 20-year remaining useful life. The building has a fair value of $1,600,000 and a book value of $1,300,000 (its original cost was $2 million). The rental payments of $200,000 are payable to the insurance company each December 31. The lease has an implicit rate of 9%. Prepare the appropriate entries for National Distribution Center on January 1, 2018 and December 31, 2018, to record the sale-leaseback and necessary adjustments.

1. Record Sale of Building
2. Record the beginning of the lease for National
3. Record the lease and interest expense for National
4. Record the amortization expense for national

1. 1-Jan-21

Dr Cash$1,600,000

Dr Accumulated Depreciation $700,000

Cr Building $2,100,000

Cr Gain On Sale of Building (BF) $200,000

2. 1-Jan-21

Dr Right Of Use Assets ( 200000* PVAF 9% for 12 year) $1,432,000

Cr Lease Payable $1,432, 000

3. 31-Dec-21

Dr Interest Expense $128,880

Dr Lease Payment (BF)$71,120

Cr Cash $200,000

4. 31-Dec-21

Dr Amortization Expenses$71,120

Cr Right Of Use Assets $71,120

Explanation:

1. Preparation of the Journal entry to Record Sale of Building

1-Jan-21

Dr Cash$1,600,000

Dr Accumulated Depreciation $700,000

(2,000,000-1,300,000)

Cr Building $2,100,000

[(1,600,000+700,000)-200,000]

Cr Gain On Sale of Building (BF) $200,000

(To Record Lease)

2. Preparation of the journal entry to Record the beginning of the lease for National

1-Jan-21

Dr Right Of Use Assets ( 200000* PVAF 9% for 12year)

(200,000*7.16)$1,432,000

Cr Lease Payable $1,432, 000

(To Record The Leae Payable)

3. Preparation of the journal entry to Record the lease and interest expense for National

31-Dec-21

Dr Interest Exp

(1,432,000*9%)$128,880

Dr Lease Payment (BF)$71,120

(200,000-128,880)

Cr Cash $200,000

(To Record First Lease payment)

4. Preparation of the journal entry to Record the amortization expense for national

31-Dec-21

Dr Amortization Expenses$71,120

Cr Right Of Use Assets $71,120

(To Record Amortisation Expense)

answer; avoid combining alcohol and

answer; /// the correct answer is (10) days; /// good luck