FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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please give narrations for each entry use commas and dollar sign no copy paste answer step by step

Frontier Inc. enters into an 8-year lease contract to lease equipment with a useful life of 8 years. Annual lease payments are due with the first
payment made immediately on January 1, 2020, the commencement of the lease. No residual value is expected or guaranteed of the underlying
equipment. Lease payments consist of (a) fixed lease payment of $13,200, (b) insurance on the equipment of $400, and (c) maintenance on the
equipment of $480. Frontier Inc. also paid legal fees of $340 related to the execution of the lease on January 1, 2020. Record Frontier's journal entries
at the commencement of the finance lease assuming an implicit interest rate of 6%, known by Frontier.
• Note: Round your final answers to the nearest whole dollar.
• Note: List multiple debits or credits (when applicable) in alphabetical order.
Account Name
Date
Dr.
Cr.
Jan. 1, 2020 Right-of-Use Asset
86,888 x
Cash
340 v
Lease Liability
86,888 x
To record asset and liability
Jan. 1, 2020 Lease Llability
13,200 x
Cash
13,200 x
To record cash lease payment
Jan. 1, 2020 Prepaid Maintenance Expense
480 v
Cash
480 v
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Transcribed Image Text:Frontier Inc. enters into an 8-year lease contract to lease equipment with a useful life of 8 years. Annual lease payments are due with the first payment made immediately on January 1, 2020, the commencement of the lease. No residual value is expected or guaranteed of the underlying equipment. Lease payments consist of (a) fixed lease payment of $13,200, (b) insurance on the equipment of $400, and (c) maintenance on the equipment of $480. Frontier Inc. also paid legal fees of $340 related to the execution of the lease on January 1, 2020. Record Frontier's journal entries at the commencement of the finance lease assuming an implicit interest rate of 6%, known by Frontier. • Note: Round your final answers to the nearest whole dollar. • Note: List multiple debits or credits (when applicable) in alphabetical order. Account Name Date Dr. Cr. Jan. 1, 2020 Right-of-Use Asset 86,888 x Cash 340 v Lease Liability 86,888 x To record asset and liability Jan. 1, 2020 Lease Llability 13,200 x Cash 13,200 x To record cash lease payment Jan. 1, 2020 Prepaid Maintenance Expense 480 v Cash 480 v
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