Question

Grichuk Power leased high-tech electronic equipment from Kolten Leasing on January 1, 2018. Kolten purchased the equipment from Wong Machines at a cost of $259.000, its fair value. (FV of $1. PV of $1. FVA of $1. PVA of S1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Informations Lease ter Quarterly lease payments Economic life of asset Interest rate charged by the lessor 2 years (8 quarterly periods) $24,000 at Jan. 1, 2018, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter. 5 years Required: Prepare a lease amortization schedule and appropriate entries for Grichuk Power from the commencement of the lease through December 31, 2018 December 31 is the fiscal year end for each company. Appropriate adjusting entries are recorded at the end of each Quarter Complete this question by entering your answers in the tabs below. General Journal Schedule Prepare a lease amortization schedule for the term of the lease for Grichuk Power from the commencement of the lease through December 31, 2018. December 31 is the fiscal year and for each company. (Enter all amounts as positive values.) Payment Date Lease Payments Effective feet Interest Decrease in assenhance 173527 01012018 04.01.2018 07/01/2018 16 01 2011 01012010

Answer 1

Part 1

Payment date	Lease payments	Effective interest	Decrease in balance	Lease balance
01/01/2018				173527
01/01/2018	24000		24000	149527
04/01/2018	24000	4486	19514	130013
07/01/2018	24000	3900	20100	109913
10/01/2018	24000	3297	20703	89210
01/01/2019	24000	2676	21324	67886
04/01/2019	24000	2037	21963	45923
07/01/2019	24000	1378	22622	23301
10/01/2019	24000	699	23301	0
Total	192000	18473	173527

Fair value = 24000*7.23028 = 173527

Present value of annuity due factor for $1 for n =8, i = 3% is 7.23028

Effective interest = previous lease balance *3%

Decrease in lease balance = lease payments – effective interest

Lease balance = previous lease balance – decrease in balance

Part 2

No.	Date	General journal	Debit	Credit
1	January 01, 2018	Right-of-use asset	173527
		Lease payable		173527
2	January 01, 2018	Lease payable	24000
		Cash		24000
3	April 01, 2018	Interest expense	4486
		Lease payable	19514
		Cash		24000
4	April 01, 2018	Amortization expense	19514
		Right-of-use equipment		19514
5	July 01, 2018	Interest expense	3900
		Lease payable	20100
		Cash		2400
6	July 01, 2018	Amortization expense	20100
		Right-of-use equipment		20100
7	October 01, 2018	Interest expense	3297
		Lease payable	20703
		Cash		24000
8	October 01, 2018	Amortization expense	20703
		Right-of-use equipment		20703
9	December 31, 2018	Interest expense	2676
		Lease payable	21324
		Cash		24000
10	December 31, 2018	Amortization expense	21324
		Right-of-use equipment		21324