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American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation. Barton and Barton completed const
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Answer #1

1)

Date Account title Debit credit
Jan 1,2021 Right of use asset-Machinery 5,500,000
Lease liability 5,500,000

2)

AMORTIZATION SCHEDULE
DATE Lease payment [A] Interest expense [B] Principal payment [A-B] Liability at end
1/1/2021 5500000
31/12/2021 1772792 5500000*11%= 605000 1167792 5500000-1167792= 4332208
31/12/2022 1772792 4332208*11%= 476543 1296249 4332208-1296249 =3035959
31/12/2023 1772792 3035959*11%= 333955 1438837 3035959-1438837= 1597122
31/12/2024 1772792 175670 1597122 .0

**Interest expense for year 2024 is adjusted for due to rounding off.

Annual payment = Lease liability /PVA11%,4

                   = 5500000/3.10245

                 = 1772792

3& 4)

Date Account title Debit credit
31Dec 2021 Interest expense 605000
Lease liability 1167792
cash 1772792
31 Dec 2021 Depreciation expense 1375000
Accumulated depreciation /Right of use asset-Machinery 1375000
31Dec 2023 Interest expense 333955
Lease liability 1438837
cash 1772792
31 Dec 2021 Depreciation expense 1375000
Accumulated depreciation /Right of use asset-Machinery 1375000

Depreciation expense : Cost /lease legal life

                               = 5500000/4

                              = 1375000

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