Question

Eye Deal Optometry leased vision testing equipment from Insight Machines on January 1, 2018. Insight Machines manufactured the equipment at a cost of $330.000 and lists a cash selling price of $412,792. Appropriate adjusting entries are made quarterly. V of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of S1) (Use appropriate factors) from the tables provided.) Related Information Lease term Quarterly lease payments Economie life of asset Interest rate charged by the lessor 5 years (20 quarterly periods) $24,750 at Jan. 1. 2018, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter. 5 years Required: 1. Prepare appropriate entries for Eye Deal to record the arrangement at its beginning. January 1, 2018, and on March 31, 2018 2. Prepare appropriate entries for Insight Machines to record the arrangement at its beginning, January 1, 2018, and on March 31, 2018 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare appropriate entries for Eye Deal to record the arrangement at its beginning, January 1, 2018, and on March 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list

Answer 1

1)	In books of Eye Deal (Lessee)
Date	General Journal	Debit	Credit
1/1/18	Right of use Assets	$ 412,792.00
	Lease Payable		$ 412,792.00
1/1/18	Lease Payable	$   24,750.00
	Cash		$   24,750.00
3/31/18	Lease Payable	$   16,989.16
	Interest Expense ($412,792 - 24750) x 8%/4	$     7,760.84
	Cash		$   24,750.00
3/31/18	Amortization Expenses ($412,792/20 )	$   20,639.60
	Right of use Assets		$   20,639.60
2)	In books of Insight Machines (Lessor)
1/1/18	Lease Receivables	$ 412,792.00
	Cost of good sold	$ 330,000.00
	Equipment		$ 330,000.00
	Sales Revenue		$ 412,792.00
1/1/18	Cash	$   24,750.00
	Lease Receivables		$   24,750.00
3/31/18	Cash	$   24,750.00
	Lease Receivables		$   16,989.16
	Interest Revenue		$     7,760.84