Homework Answers
| The amount of Right to Use Asset = $144398 | ||||
| Date | Account Title & Explanation | Debit | Credit | |
| Jan1, 2020 | Right To Use Asset | 144398 | ||
| Lease Liability | 144398 | |||
| Lease Amotisation Schedule | ||||
| Date | Annual Payment | Interest on Unpaid Liability | Reduction of Lease Liability | Balance of Lease Liability |
| $1,44,398.00 | ||||
| 01-Jan-20 | $34,629.00 | $0.00 | $34,629.00 | $1,09,769.00 |
| 01-Jan-21 | $34,629.00 | $11,551.84 | $23,077.16 | $86,691.84 |
| 01-Jan-22 | $34,629.00 | $8,663.88 | $25,965.12 | $60,726.72 |
| 01-Jan-23 | $34,629.00 | $5,775.92 | $28,853.08 | $31,873.64 |
| 01-Jan-24 | $34,629.00 | $2,887.96 | $31,741.04 | $132.60 |
| Journal Entries | ||||
| Date | Account Title & Explanation | Debit | Credit | |
| Jan 1, 2020 | Lease liability | $34,629.00 | ||
| Bank | $34,629.00 | |||
| Dec 31, 2020 | Depreciation | $28,879.60 | ||
| Right To Use Asset | $28,879.60 | |||
| Dec 31, 2020 | Interest | $11,551.84 | ||
| Interest Payable | $11,551.84 | |||
| Jan 1, 2021 | Interest | $11,551.84 | ||
| Lease Liabilty | $23,077.16 | |||
| Bank | $34,629.00 | |||
| Dec 31, 2021 | Depreciation | $28,879.60 | ||
| Right To Use Asset | $28,879.60 | |||
| Dec 31, 2021 | Interest | $8,663.88 | ||
| Interest Payable | $8,663.88 | |||
| Working Notes | ||||
| Annual Rental | 34629 | |||
| Present Value of Rent | ||||
| Payment date | Amount (A) | PVF (B) | (A)X(B) | |
| 01-Jan-20 | 34,629.00 | 1 | 34,629.00 | |
| 01-Jan-21 | 34,629.00 | 0.90909 | 31,480.88 | |
| 01-Jan-22 | 34,629.00 | 0.82645 | 28,619.14 | |
| 01-Jan-23 | 34,629.00 | 0.75132 | 26,017.46 | |
| 01-Jan-24 | 34,629.00 | 0.68301 | 23,651.95 | |
| 1,73,145.00 | Total | 1,44,398.43 | ||
| Years | PV | Interest | Depreciation | |
| L0 | 1,44,398.00 | 28,879.60 | ||
| L1 | 1,15,518.40 | 11,551.84 | 28,879.60 | |
| L2 | 86,638.80 | 8,663.88 | 28,879.60 | |
| L3 | 57,759.20 | 5,775.92 | 28,879.60 | |
| L4 | 28,879.60 | 2,887.96 | 28,879.60 | |
| - | ||||
| 4,33,194.00 | 28,879.60 | 1,44,398.00 | ||
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