Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $123,288. (FV of $1. PV of $1. FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly rental payments Economic life of asset Fair value of asset Implicit interest rate (Also lessee's incremental borrowing rate) Required: Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis. Complete this question by entering your answers in the tabs below. Amort Schedule 01/01/2021 04/01/2021 07/01/2021 10/01/2021 Prepare a lease amortization schedule for the term of the lease for Manufacturers Southern. (Round your intermediate calculations and final answers to the nearest whole dollar) Payment Date 01/01/2022 04/01/2022 07/01/2022 General Journal 10/01/2022 Total 2 years (8 quarterly periods) $16,500 at the beginning of each period 2 years $123,288 8% Lease Payments Effective Interest Decrease in Balance < Amort Schedule Lease Balance General Journal >

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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# Lease Amortization and Journal Entries for Manufacturers Southern

**Background:**

Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $123,288. To prepare the entries and calculate the lease amortization, use the following financial data:

- **Lease Information:**
  - Lease Term: 2 years (8 quarterly periods)
  - Quarterly Rental Payments: $16,508 at the beginning of each period
  - Economic Life of Asset: 2 years
  - Fair Value of Asset: $123,288
  - Implicit Interest Rate: 8% (Also lessee's incremental borrowing rate)

**Required Tasks:**

1. Prepare a lease amortization schedule and appropriate journal entries for Manufacturers Southern from the beginning of the lease through January 1, 2022.
2. Amortize the right-of-use asset using a straight-line basis, recorded at the end of each fiscal year (December 31).

**Instructions:**

To complete the task, enter your answers in the provided tabs. 

**Lease Amortization Schedule:**

- **Columns:**
  - Payment Date
  - Lease Payments
  - Effective Interest
  - Decrease in Balance
  - Lease Balance

**Graph/Table Explanation:**

- **Payment Date:**
  - Lists dates for each quarterly payment starting from 01/01/2021 to 10/01/2022.
  
- **Lease Payments:**
  - Amount paid each quarter under the lease terms.
  
- **Effective Interest:**
  - Interest amount calculated based on the outstanding balance and the implicit rate.
  
- **Decrease in Balance:**
  - Reduction in the lease obligation after each payment, excluding interest.
  
- **Lease Balance:**
  - Remaining balance of the lease obligation after each payment.

**Navigation:**

Use the "Amort Schedule" for updating or reviewing the payment schedule and click "General Journal" for adding the journal entries related to these transactions.

**Note:** Remember to round your intermediate calculations and final answers to the nearest whole dollar.
Transcribed Image Text:# Lease Amortization and Journal Entries for Manufacturers Southern **Background:** Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $123,288. To prepare the entries and calculate the lease amortization, use the following financial data: - **Lease Information:** - Lease Term: 2 years (8 quarterly periods) - Quarterly Rental Payments: $16,508 at the beginning of each period - Economic Life of Asset: 2 years - Fair Value of Asset: $123,288 - Implicit Interest Rate: 8% (Also lessee's incremental borrowing rate) **Required Tasks:** 1. Prepare a lease amortization schedule and appropriate journal entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. 2. Amortize the right-of-use asset using a straight-line basis, recorded at the end of each fiscal year (December 31). **Instructions:** To complete the task, enter your answers in the provided tabs. **Lease Amortization Schedule:** - **Columns:** - Payment Date - Lease Payments - Effective Interest - Decrease in Balance - Lease Balance **Graph/Table Explanation:** - **Payment Date:** - Lists dates for each quarterly payment starting from 01/01/2021 to 10/01/2022. - **Lease Payments:** - Amount paid each quarter under the lease terms. - **Effective Interest:** - Interest amount calculated based on the outstanding balance and the implicit rate. - **Decrease in Balance:** - Reduction in the lease obligation after each payment, excluding interest. - **Lease Balance:** - Remaining balance of the lease obligation after each payment. **Navigation:** Use the "Amort Schedule" for updating or reviewing the payment schedule and click "General Journal" for adding the journal entries related to these transactions. **Note:** Remember to round your intermediate calculations and final answers to the nearest whole dollar.
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