FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
Bartleby Related Questions Icon

Related questions

bartleby

Concept explainers

Question
On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease
requires three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 of
Year 1 and Year 2). The present value of the three annual lease payments is $51,000, using a 6.003% interest rate. The
lease payment schedule follows.
Date
January 1, Year 1
December 31, Year 1
December 31, Year 2
View transaction list
1
Journal entry worksheet
2
(A) Beginning
Balance of
Lease
Liability
3
$ 51,000
33,000
16,981
Note: Enter debits before credits.
Date
Year 1
December 31
(B) Debit
Interest on
Lease Liability
6.003% X (A)
3. Prepare the December 31 journal entry to record straight-line amortization with zero salvage value at the end of (a) Year 1, (b) Year 2,
and (c) Year 3.
1,981
1,019
$ 3,000
+
General Journal
(C) Debit
Lease
Liability (D)
(B)
$ 18,000
16,019
16,981
$ 51,000
Record amortization of right-of use asset at December 31 of the first year.
Debit
(D) Credit
Cash Lease
Payment
$ 18,000
18,000
18,000
$ 54,000
Credit
(E) Ending
Balance of
Lease
Liability (A)
(C)
$ 33,000
16,981
0
3
expand button
Transcribed Image Text:On January 1, Rogers (lessee) signs a three-year lease for machinery that is accounted for as a finance lease. The lease requires three $18,000 lease payments (the first at the beginning of the lease and the remaining two at December 31 of Year 1 and Year 2). The present value of the three annual lease payments is $51,000, using a 6.003% interest rate. The lease payment schedule follows. Date January 1, Year 1 December 31, Year 1 December 31, Year 2 View transaction list 1 Journal entry worksheet 2 (A) Beginning Balance of Lease Liability 3 $ 51,000 33,000 16,981 Note: Enter debits before credits. Date Year 1 December 31 (B) Debit Interest on Lease Liability 6.003% X (A) 3. Prepare the December 31 journal entry to record straight-line amortization with zero salvage value at the end of (a) Year 1, (b) Year 2, and (c) Year 3. 1,981 1,019 $ 3,000 + General Journal (C) Debit Lease Liability (D) (B) $ 18,000 16,019 16,981 $ 51,000 Record amortization of right-of use asset at December 31 of the first year. Debit (D) Credit Cash Lease Payment $ 18,000 18,000 18,000 $ 54,000 Credit (E) Ending Balance of Lease Liability (A) (C) $ 33,000 16,981 0 3
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education