On January 1, 2018, Nath-Langstrom Services, Inc., a computer
software training firm, leased several computers under a two-year
operating lease agreement from ComputerWorld Leasing, which
routinely finances equipment for other firms at an annual interest
rate of 4%. The contract calls for four rent payments of $13,500
each, payable semiannually on June 30 and December 31 each year.
The computers were acquired by ComputerWorld at a cost of $97,000
and were expected to have a useful life of Five years with no
residual value. Both firms record amortization and depreciation
semi-annually. (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.)
Required:
Prepare the appropriate entries for both the lessee and the lessor
from the beginning of the lease through the end of 2018.
(If no entry is required for a transaction/event, select
"No journal entry required" in the first account field. Round your
intermediate calculations to the nearest whole dollar
amount.)
1. 1/01/18 Record the beginning of the lease
for Nath-Langstrom Services.
2. 6/30/18 Record the lease payment and interest expense for
Nath-Langstrom Services.
3. 6/30/18 Record the amortization expense for Nath-Langstrom
Services.
4. 12/31/18 Record the lease payment and interest expense for
Nath-Langstrom Services.
5. 12/31/18 Record the amortization expense for Nath-Langstrom
Services.
6. 6/30/18 Record the lease revenue received by ComputerWorld
Leasing.
7. 6/30/18 Record the Depreciation expense for ComputerWorld
Leasing.
8. 12/31/18 Record the lease revenue received by ComputerWorld
Leasing.
9. 12/31/18 Record the Depreciation expense for ComputerWorld
Leasing.
Journal Entries - Nath-Langstrom Services, Inc. | ||||
Date | Particulars | Debit | Credit | |
1 | 1-Jan-18 | Right of use asset Dr | $51,404.00 | |
To Lease Payable ($13,500 * 3.80773) | $51,404.00 | |||
(To record right of use assets on lease) | ||||
2 | 30-Jun-18 | Interest Expense Dr ($51,404*2%) | $1,028.08 | |
Lease Payable Dr | $12,471.92 | |||
To Cash | $13,500.00 | |||
(To record lease payment) | ||||
3 | 30-Jun-18 | Amortization Expense Dr | $12,471.92 | |
To Right of use asset | $12,471.92 | |||
(To record amortization of asset) | ||||
4 | 31-Dec-18 | Interest Expense Dr [($51404 - $12471)*2%] | $778.64 | |
Lease Payable Dr | $12,721.36 | |||
To Cash | $13,500.00 | |||
(To record lease payment) | ||||
5 | 31-Dec-18 | Amortization Expense Dr | $12,721.36 | |
To Right of use asset | $12,721.36 | |||
(To record amortization of asset) |
Journal Entries - ComputerWorld Leasing | ||||
Date | Particulars | Debit | Credit | |
6 | 30-Jun-18 | Cash Dr | $13,500.00 | |
To Lease revenue | $13,500.00 | |||
(To record lease revenue) | ||||
7 | 30-Jun-18 | Depreciation Expense Dr ($97,000/10) | $9,700.00 | |
To Accumulated depreciation | $9,700.00 | |||
(To record depreciation) | ||||
8 | 31-Dec-18 | Cash Dr | $13,500.00 | |
To Lease revenue | $13,500.00 | |||
(To record lease revenue) | ||||
9 | 31-Dec-18 | Depreciation Expense Dr ($97,000/10) | $9,700.00 | |
To Accumulated depreciation | $9,700.00 | |||
(To record depreciation) |
On January 1, 2018, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under...
On January 1, 2018, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 6%. The contract calls for four rent payments of $14,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $98,000 and were expected to have a useful life of Seven years...
On January 1, 2018, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 6%. The contract calls for four rent payments of $17,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computerworld at a cost of $104,000 and were expected to have a useful life of Five years...
On January 1, 2018, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $17,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $105,000 and were expected to have a useful life of Six years...
On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $16,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $102,000 and were expected to have a useful life of Six years...
On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $19,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $109,000 and were expected to have a useful life of Five years...
On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 6%. The contract calls for four rent payments of $11,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $92,000 and were expected to have a useful life of five years...
On January 1, 2018, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from Computer World Leasing, which routinely finances equipment for other firms at an annual interest rate of 6%. The contract calls for four rent payments of $17,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computerworld at a cost of $104,000 and were expected to have a useful life of Five...
On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 6%. The contract calls for four rent payments of $11,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computerworld at a cost of $92,000 and were expected to have a useful life of five years...
On January 1, 2021, Nath-Langstrom Services, Inc., a computer
software training firm, leased several computers under a two-year
operating lease agreement from ComputerWorld Leasing, which
routinely finances equipment for other firms at an annual interest
rate of 4%. The contract calls for four rent payments of $10,000
each, payable semiannually on June 30 and December 31 each year.
The computers were acquired by ComputerWorld at a cost of $90,000
and were expected to have a useful life of five years...
On January 1, 2021, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $16,500 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $103,000 and were expected to have a useful life of five years...