Question

Martinez Corporation manufactures replicators. On January 1, 2017, it leased to Althaus Company a replicator that had cost $102,900 to manufacture. The lease agreement covers the 5-year useful life of the replicator and requires 5 equal annual rentals of $44,300 payable each January 1, beginning January 1, 2017. An interest rate of 11% is implicit in the lease agreement. Collectibility of the rentals is reasonably assured, and there are no important uncertainties concerning costs.

Prepare Martinez’s January 1, 2017, journal entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)

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Date	Account Titles and Explanation	Debit	Credit
January 1, 2017	enter an account title to record the lease on January 1, 2017	enter a debit amount	enter a credit amount
	enter an account title to record the lease on January 1, 2017	enter a debit amount	enter a credit amount
	(To record the lease.)
January 1, 2017	enter an account title to record cost on January 1, 2017	enter a debit amount	enter a credit amount
	enter an account title to record cost on January 1, 2017	enter a debit amount	enter a credit amount
	(To record cost.)
January 1, 2017	enter an account title to record the first lease payment on January 1, 2017	enter a debit amount	enter a credit amount
	enter an account title to record the first lease payment on January 1, 2017	enter a debit amount	enter a credit amount
	(To record first lease payment.)

Answer 1

Years	Lease rent	PVF	Present value
1	44300	1	44300
2	44300	0.9009	39909.87
3	44300	0.81162	35954.77
4	44300	0.73119	32391.72
5	44300	0.65873	29181.74
	Total Present Value		181738.1
date	particulars	Debit	Credit
Jan 1 2017	Lease receivable	181738
	Replicator		181738
	( to record lease)
Jan 1 2017	no entry
	( to record cost)
Jan 1 2017	Cash	44300
	Lease receivable		44300
	( to record first lease payment)